## An assessment of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Belarus (_cr07190) ## Source details **Canonical URL:** [An assessment of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Belarus (_cr07190)](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2007/_cr07190.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2007/_cr07190.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2007/_cr07190.pdf.json) --- ### Executive summary and overall assessment - Assessment basis: Forty Recommendations 2003 and Eight Special Recommendations on Terrorist Financing 2001 of the FATF; prepared using the AML/CFT Methodology 2004. The assessment included Special Recommendation IX of October 2004 concerning cash couriers. - Mission dates: information obtained during the mission from December 2–16, 2004. - Assessment team: Mr. Terence Donovan, Mr. John Abbott (MFD), Mr. Antonio Hyman Bouchereau (LEG), and Mr. Andrea Nicolai (Italian FIU). - Principal conclusion: - Belarus has many elements of a modern AML regime (ML criminalized; financial institutions obliged to monitor and report; detailed compliance supervision; on-site examinations; two agencies exercise financial intelligence functions; ML offenses investigated and successfully prosecuted; some capacity for international cooperation). - Gaps, misalignments, and incomplete implementation significantly undermine full effectiveness and several aspects fall well short of FATF standards. ### Key shortcomings identified - Legal and institutional - Legal framework incomplete and misdirected in places. - Legislation criminalizing terrorist financing as a separate offense has not been adopted. - Multiple agencies with varied primary missions involved with no single institution taking effective primary responsibility for policy coordination or operational administration of the AML regime. - AML objectives frequently incidental or subordinate to tax compliance, foreign currency administration, or general intelligence gathering. - Department of Financial Monitoring (DFM), designated FIU, divides essential functions with the Ministry of Taxes and Duties (MTD) and lacks a full range of powers in international cooperation. - A number of DNFBPs not subject to AML requirements; AML regulations for DNFBPs have not been developed; awareness levels in these sectors are low. - Operational and implementation - ML concepts, including the nature of a suspicious transaction, are not clearly articulated or consistently understood. - Insufficient emphasis on detection, deterrence, and reporting of truly suspicious transactions. - Financial intelligence analysis is not centralized in a single agency. - Provisions for international cooperation need strengthening. - Additional AML training needed for government agencies and the financial sector. - Other concerns - Controls on personal remittances (permission to access remittances in excess of US$10 and retention in designated ‘charity’ accounts) disrupt legitimate beneficiaries and risk driving transactions underground. - No indicators of involvement in terrorist financing had come to authorities’ attention at mission time. - Potential reputational risk from banks operating in Free Economic Zones (FEZ). ### Money laundering and terrorist financing threats, typologies, and vulnerabilities - Perceived predicate offenses linked to ML - Tax evasion (considered by authorities to be, by far, the most important predicate for ML). - Customs violations; fraud and contraband; white collar crime; links to drugs, trafficking in people, and illegal arms dealing. - Belarus identified as a main crossing point for tobacco products originating in Russia and Ukraine and destined for Western Europe. - ML typologies - Use of fly-by-night firms (‘overnight companies’) abandoned before suspicions are raised. - Use of lost or stolen passports, credit cards, false documents. - Use of legal entities in Russia, the Balkans, and European offshore centers as counterparties. - Interest-free loans from abroad to gain use in Belarus of illegal proceeds previously remitted abroad. - Rapid funds transfers through FEZ banks with no economic rationale. - False invoicing to convert noncash proceeds into cash followed by cash transactions. - Cross-border cash movement concerns - Cross-border cash movements across the Russian border where there are no controls. - Cash withdrawals in rubels (RBL) on international credit cards not subject to controls may act as virtual inward cash couriers. - Inward remittances via Western Union and similar companies of concern despite typically small values. - Controls requiring permission to access personal remittances from abroad in excess of US$10 and retention in ‘charity’ accounts pending permission. ### Financial sector and DNFBP overview (key statistics and structure) - Banking sector - Total banks with license: 31 active banks licensed to conduct a wide range of commercial banking operations. - Market concentration: the six largest banks make up about 85 percent of total assets of the banking system. - Ownership of six largest banks: five of the six largest are exclusively or mainly state owned. - Largest bank market share: main domestic savings bank accounts for about 41 percent of bank assets and holds 63 percent of retail deposits. - FEZ banks: 6 banks operate in Free Economic Zones (FEZ); small and mainly restricted to business with FEZ residents and nonresidents of Belarus. - Foreign participation: largely confined to smaller banks through joint ventures; no foreign branches authorized. - Money exchange: separately licensed activity, to date authorized only for banks. - Remittance activity: only banks may be agents for money remitters; Western Union is the largest money remitter. - Postal service: Post Office conducts a large domestic payments system and handles a significant volume of cross-border remittances. - Insurance sector - Registered insurance companies: 34 registered; 31 currently licensed and operational. - Government ownership: 3 government owned. - Largest insurer: government owned Belgosstrakh accounts for approximately 60 percent of sector activity. - Life insurance: 6 companies provide a narrow range of products. - Reinsurance: limited local capacity; firms reinsure excess risk with Russian and European counterparties. - Regulator: Ministry of Finance (MoF). ### Securities sector and DNFBPs - Securities sector - 131 firms licensed to operate in the securities sector, a number of which are dormant. - Market activity dominated by transactions in government securities and NBRB securities; banks dominate trading. - Transactions in corporate shares limited; approximately 85 percent of all shares issued are held by the State. - Shares sold for privatization vouchers frequently subject to trading restrictions. - Securities sector regulated by the Committee on Securities at the Council of Ministers (CoS). - DNFBPs - Most important DNFBPs: lawyers, notaries, auditors, real estate agents, and casinos. - Company formation services provided by lawyers, notaries, and accountants; trust activity not well developed; asset management largely confined to banks. - Dealings in precious metals and stones limited; banks operate under special NBRB license; nonbank dealers licensed by MoF. - Approximately 25 casinos operate around the country; most activity concentrated in Minsk. - Of DNFBPs, only notaries and casinos are currently subject to the AML Law. ### Legal persons and arrangements; company formation thresholds - Legal entities may be commercial or noncommercial organizations. - Direct foreign investors may form legal entities of any legal form without restrictions on investment amount. - A company receives the status of a commercial organization with foreign investments if the contribution of a foreign participant is equivalent to at least US$20,000 and its stake in the charter capital is no less than 30 percent. ### Institutional framework for combating ML/TF - NBRB: licensing and supervisory authority for banks; only banks can offer currency exchange services; remittance services may only be provided by banks or the post office. - DFM designated FIU; in practice FIU functions carried out by both DFM and MTD. - Under AML Law, DFM only receives SDFs regarding financial transactions carried out in foreign currency. - DFM represents Belarus in the Eurasian Group Against Money Laundering (EAG); applied for Egmont Group membership. - Draft AML Law provides for reorganization of DFM with exclusive responsibility for gathering SDFs, analyzing and disseminating financial intelligence. - Law enforcement agencies operate under supervision of the Prosecutor General’s Office (PGO): investigatory divisions of the PGO, MIA investigatory divisions, Financial Investigations Department (FID) of the SCC, Economic Security Directorate of the State Security Committee (SSC). - Specific responsibilities of investigatory agencies not clearly established by legislation; no precise coordination mechanism for AML/CFT actions. ### The Financial Intelligence Unit (DFM) — functions, statistics, and needs - DFM structure: Information and Technological Division (seven persons), Analytical Division (eight persons), Coordination and International Cooperation Division (seven persons). - Limitations and operational issues - DFM lacks comprehensive guidance to reporting entities; only a list circulated to banks with examples. - DFM does not enjoy budgetary independence from SCC but reportedly free to select staff and decide when to disseminate information independent of SCC Chairman. - Critical limitation: AML Law requires reporting entities to submit SDFs to SCC only on operations in foreign currency; DFM’s inability to receive SDFs on local currency seriously restricts its FIU role. - No specific provisions for feedback from LEAs to DFM on investigations. - Planned computerized database for SDF processing lacking financing. - Reporting statistics (exact figures as recorded) - First ten months of 2004: DFM received and processed "18,283 SDFs" (foreign currency); "14,500 SDFs" from banks. - Of total SDFs to DFM, "2,290" warranted additional information from banks. - DFM received "131" submissions on suspected illegal activity from other agencies. - In 2004 DFM received "13" submissions on suspected ML from foreign FIUs and forwarded "32 SDFs" to foreign FIUs. - "2,563 (or approximately 11 percent of the total)" SDFs submitted to the DFM concerned transactions below thresholds in AML Law. - MTD SDFs received between 2000 and 2004: - 2000: "9,739" - 2001: "52,927" - 2002: "49,954" - 2003: "79,616" - 2004: "93,561" - Of the 93,561 SDFs to MTD in 2004: - "13,765 (14.7 percent)" related to individuals transactions >= "2,000 base units" - "51,903 (55.5 percent)" were other entities transactions >= "20,000 base units" - "27,893 (29.8 percent)" concerned transactions below these thresholds - Between 2000–2004, MTD-originated criminal cases filed: "24 criminal cases" (fraud 4, property damage 2, nonreporting operations in foreign currency 1, smuggling 5, illegal entrepreneurship 4, proceeds of crime 4, tax evasion 2, forgery 2). - Recommended DFM reforms (selected) - Enact draft AML Law to provide DFM framework. - Consolidate DFM as single, centralized FIU. - Provide for electronic submission of STRs. - Achieve early membership in Egmont Group. - Provide adequate funding, staffing and enhanced electronic database. - DFM should maintain statistics on all STRs, not only foreign currency transactions. - FATF ratings cited - R.26: "Noncompliant" - R.30: "Noncompliant" - R.32: "Noncompliant" ### Criminalization of Money Laundering (ML) — Article 235 and related issues - ML criminalized in June 1999 as "legalization of illegally acquired proceeds" through Article 235 of the Criminal Code (CC). - Article 235 defines ML as: - (i) the intentional performance of financial operations with illegally acquired proceeds, or - (ii) the intentional use of illegally acquired proceeds in commercial or business activity with the purpose of concealing or misrepresenting the nature, source, location, placement, movement, or actual ownership of said proceeds. - Evidentiary standard and mens rea - Prosecutor required to prove perpetrator had both intent to legalize illegal proceeds and specific knowledge of the predicate offence; a prior conviction for the predicate offense is also required to prove funds are proceeds of crime. - Remark 1 to Article 235: a person who commits the predicate offense cannot be prosecuted for ML — mission recommends removal. - In practice, preceding conviction for the predicate offense is required to prosecute an ML offense. - Scope limitations - Article 235 may not explicitly establish all required offences relating to ML in accordance with the Vienna and Palermo Conventions; conversion or transfer not clearly criminalized. - Legal entities are not criminally liable; only physical persons criminally liable under CC. - Sanctions and prosecutorial practice - Article 235 sanctions may be imposed alternatively by a fine, prohibition of holding certain posts or engaging in certain activities, or a prison term of up to four years. - Where Article 235 cannot be proved, prosecutors typically prosecute under other CC offenses. - Prosecutions statistics - Number of prosecutions for ML since Article 235 came into effect: "approximately 10 cases per year" (authorities’ information), (all convictions). - Recommendations (selected) - Amend Article 235 to reduce burden of proof as to mens rea. - Clearly criminalize all types of ML as required by Vienna and Palermo Conventions. - Remove Remark 1 and Remark 2 from Article 235. - Criminalize insider trading and market manipulation in the CC. - Establish that intentional element may be inferred from objective factual circumstances. - Establish criminal liability of legal entities or civil/administrative liability if criminal liability not possible. - FATF compliance highlights - R.1: "Partially compliant" - R.2: "Largely compliant" ### Criminalization of Terrorist Financing (FT) and counter-terrorism framework - Legal basis and gaps - Article 3.11 of Law No. 77-3 of January 3, 2002 (CT Law): knowingly financing or otherwise assisting a terrorist organization regarded as terrorist activity. - CC does not include a separate provision establishing criminalization of FT; Belarus does not have a separate law criminalizing FT. - FT not defined and criminalized as a distinct and separate offense from terrorism — inconsistent with FT Convention. - Proposed reforms - Introduction of new Article 289-1 in CC criminalizing FT and ensuring perpetrators can be charged even if funds not used or not linked to a specific act. - Draft amendment to CT Law to insert “financing of terrorist activity” definition. - Draft Article 23-1 to provide criminal liability for legal entities for FT; proposed mandatory liquidation of legal entities used for FT with confiscation of property in country. - Historical statistic - In the period 2002-2004 no criminal cases relating to terrorist activities, their financing, recruitment to terrorist organizations or provision of support were referred to the courts in Belarus. - Recommendations (selected) - Criminalize FT as a separate and autonomous offense from terrorist acts. - Introduce preventive measures against FT. - Amend Article 285 to establish liability for recruitment (payment) of a person to be a member of a terrorist organization or for participation in commission of a terrorist act. - FATF/SR rating - SR.II: "Noncompliant" ### Freezing, seizure and confiscation of proceeds of crime (R.3) and SR.III - Legal basis and practice - Confiscation is conviction-based and available for serious criminal offences including ML; civil forfeiture not available. - Article 61 CC: confiscation requires a conviction and may be applied for grave and especially grave offenses committed for the sake of profit, only in cases specified in CC. - Article 235 CC: confiscation of proceeds of illegally acquired activity is an optional sanction upon conviction for ML. - Article 10 OCC Law and Article 98 CPC provide authorities for seizure; urgent measures possible but procedural limits exist. - No legislation providing for mandatory freezing/confiscation specifically for FT; no laws regarding freezing funds/assets belonging to terrorists or terrorist organizations. - NBRB Resolution No.10 of January 28, 2000 instructs banks to suspend debit and credit transactions on accounts of terrorists/designated persons based on UNSC lists; lacks detailed procedures. - Recommendations (selected) - Amend Article 235 CC to make confiscation an obligatory sanction upon conviction for ML or FT. - Make property of legal entities subject to confiscation upon conviction for ML or FT. - Extend provisional measures in OCC Law to investigations related to all crimes, including ML and FT. - Establish provisions for freezing, seizure and confiscation of funds or other assets related to FT. - Establish specific legal requirement to freeze terrorist assets without delay and without prior notice to persons designated in UNSC and national lists; include unfreezing procedures. - Provide the DFM authority to order freezing where grounds to suspect funds intended for terrorism. - FATF/SR ratings - R.3: "Partially compliant" - SR.III: "Noncompliant" ### Law enforcement, prosecution and investigative framework (R.27, R.28, R.30 & R.32) - Investigative organisation and coordination - Investigations supervised by PGO; conducted by investigatory divisions of PGO, MIA, FID (SCC), and SSC as assigned. - SSC (FID) has national and regional offices; MIA handles economic crimes with foreign elements. - Provisional investigative timeframes: - Preliminary investigations should be concluded within "two months" but can be extended: - District Prosecutor supervised: extended "six additional months" - Regional Prosecutor supervised: extended "nine additional months" - Prosecutor General supervised: may be extended indefinitely - Investigative powers - Investigators authorized to use overt and covert techniques, controlled delivery, surveillance, wire-tapping, and to delay arrest/seizure for investigative purposes. - Article 17 of Law No.369-3: SCC officials can enter premises (excluding dwellings) to check cash, securities, stocks and other valuables. - Training, confidentiality and statistics - Investigators required to maintain confidentiality; employees of courts, prosecutors, preliminary investigative bodies, and foreign exchange control organizations liable for unauthorized disclosure. - Internal training programs exist; no specialized AML/CFT training for staff or judges. - No statistics available on amounts resulting from seizure and confiscation, generally or for ML specifically. - Recommendations - Establish mechanism to improve coordination between agencies investigating ML offences. - Provide training for judges and prosecutors on ML, FT and seizure, freezing and confiscation. - Compile and maintain relevant statistics. - FATF ratings - R.27: "Compliant" - R.28: "Compliant" - R.30: "Noncompliant" - R.32: "Noncompliant" ### Cash couriers and cross-border movement of currency (SR.IX) - Legal measures and declaration thresholds (exact rules) - Joint Resolution No. 73/38 of April 30, 2004 (NBRB and Customs) measures apply only to individuals. - Declaration requirements: - Import of cash exceeding equivalent of "US$3,000" in foreign currency: compulsory written declaration. - Import of cash "US$3,000 or lower" in foreign currency, or equivalent of "500 base units or lower in RBL": written declaration voluntary; verbal disclosure may be requested. - Export of cash exceeding equivalent of "US$3,000" in foreign currency: compulsory written declaration. - Export of cash "US$3,000 or lower" in foreign currency, or equivalent of "500 base units or lower in RBL": written declaration voluntary; verbal disclosure may be requested. - Import exceeding equivalent of "US$10,000" in foreign currency: requires customs declaration or foreign exchange certificate confirming import from Customs Union member (Kazakhstan, Kyrgyzstan or Russia), or bank authorization from Customs Union country. If amount imported is "US$10,000 or lower", such documents not required, but written declaration necessary if amount exceeds "US$3,000". - Operational practice and gaps - Declarations completed by hand; no centralized database; measures do not specifically reference bearer negotiable instruments. - Customs lack follow-up investigative role; detentions may be referred to SCC or MIA. - Concerns about the Russian border where no controls; customs need technical resources and equipment. - Recommendations - Provide AML/CFT training to customs officers. - Acquire equipment to run centralized database to analyze cash movement declarations. - Extend requirements and powers to include bearer negotiable instruments. - Provide Customs authority to seize and detain cash to ascertain whether evidence of ML or FT may be found. - Make information collected by Customs consistently available to the DFM. - FATF/SR rating - SR.IX: "Noncompliant" ### Preventive measures — scope, thresholds, CDD, STRs, and record keeping (R.5–R.11, SR.VII) - Current legal obligations - AML Law requires banks, nonbank financial institutions and certain DNFBPs to: - record and report financial operations subject to special control; - perform customer identification; - retain records related to foreign exchange transactions for 10 years; - retain other records related to domestic currency transactions per archives and business correspondence legislation; - develop internal policies and internal controls as necessary to comply with the AML Law. - Financial transactions subject to special control include cash and deposit transfers, wire transfers, asset transfers, loans, transfers of movable and immovable property, donations and grants, provided: - the amount of a single transaction exceeds approximately US$23,000 for a natural person or approximately US$230,000 for legal entities and others, or - when the aggregate amount of several transactions performed within a month by the same person exceed these thresholds. - Financial institutions required to register such transactions in a special data form (SDF) and transmit information to the relevant monitoring agency. - Thresholds and reporting practice (exact numbers) - Single operation amounts to be reported if exceeding 2,000 base units (approximately US$23,000) for a natural person or 20,000 base units for legal entities; several transactions aggregated within a month exceeding these thresholds also trigger reporting. - In practice some reporting entities forward SDFs for transactions below threshold (about 10 percent of SDFs received by DFM are below threshold). - Article 4 provides for submission to the MTD (domestic and foreign-currency transactions) and to the DFM (foreign-currency transactions) of reports in a standard format within 24 hours of transactions subject to special controls. - Customer due diligence (CDD) and KYC - Article 3.4 AML Law: required to "maintain registers containing information about clients" — law lacks detailed CDD requirements required by FATF R.5. - NBRB “Know Your Customer” (KYC) recommendations (updated August 2003) are legally nonbinding but treated as mandatory in practice. - Passport data may be sufficient for identification for a one-time transaction not exceeding 2,000 base units (approximately US$23,000). - No specific requirement to identify beneficial owners; banks instructed to understand ownership and control structure but not explicitly to identify ultimate beneficial owner. - No specific requirements for enhanced due diligence for politically-exposed persons (PEPs). - Correspondent banking recommendations lack essential criteria such as senior management approval and reference to correspondent’s AML/CFT regime. - No specific AML/CFT requirements for risks from internet or electronic banking; no non-face-to-face account opening allowed in practice. - Record keeping and wire transfers - Article 4 requires registers and archives of clients and original documents pertaining to financial operations in foreign currency from account opening and for 10 years following closing of the account; agreements/contracts relating to transactions in foreign currency held for 20 years (interpretation unclear). - In practice banks keep all records for a minimum period of 10 years. - No specific AML Law or NBRB requirements on originator information for wire transfers; in practice NBRB confirms mandatory completion of every field in outgoing SWIFT messages. - Mission recommendation: revise AML Law to require retention no less than five years; introduce specific requirements for originator information for wire transfers in line with SR.VII. - Suspicious transaction reporting (STR) - Article 4 and AML Law threshold-based SDF regime does not equate to FATF Recommendation 13 STR regime. - AML Law ambiguous on definition of suspicion; does not cover terrorist financing nor attempted transactions; establishes thresholds rather than covering all transactions. - Recommendations include: amend reporting requirement to include reporting without delay to DFM of all suspicious transactions regardless of size or currency; provide that STR filing is necessary in case of suspicion of ML or FT; amend law to provide clearer prohibition on tipping off; extend legal protections for reporting including below-threshold reporting; enact FT Law. - FATF compliance highlights (selected) - R.4: Compliant - R.5: Partially compliant - R.6: Noncompliant - R.7: Partially compliant - R.8: Noncompliant - R.10: Noncompliant - R.11: Partially compliant - R.13: Noncompliant - SR.VII: Noncompliant - R.14: Partially compliant ### Supervisory framework, sanctions, and resources - NBRB supervisory powers and sanctions - NBRB sanctions include financial penalty and/or suspension of license to engage in certain banking operations for up to one year; possible removal of chief executive; suspension/withdrawal of banking license; temporary management by NBRB. - Article 135 of the BC lists remedial and sanction powers. - Supervisory resources and activity (exact figures) - Banking Supervision Department (BSD) consists of 129 specialists; 62 at headquarters in Minsk; 67 across 6 regional offices. - Typical NBRB inspection lasts approximately one month with 15–25 inspectors. - 17 general inspections in 2004. - CoS has 34 staff. - Insurance supervision - On-site inspections prepared annually, inspections no more often than once every two years; in practice interval can exceed three years. - Recommendations - Update on-site and off-site supervisory practices to include full FATF 40+9 aspects. - Clarify CoS role in securities AML/CFT. - Provide additional resources, especially to CoS. ### Designated Non-Financial Businesses and Professions (DNFBPs) — scope, supervision, and gaps - Current coverage - Only casinos and notaries are regulated specifically for AML/CFT under current law. - Other DNFBPs (lawyers, auditors, real estate agents, dealers in precious metals and stones) are subject to licensing/regulation but not mandatory AML/CFT CDD or reporting obligations. - Casinos (exact thresholds and practice) - Approximately 25 casinos operate; winnings of 1,000 base units (approximately US$11,500) or more must be reported to MTD with passport identification. - Notaries - Notaries are required to file reports on financial transactions subject to special controls, including movable and real property transactions. - Lawyers and auditors - Lawyers: strong confidentiality rules; neither public nor private lawyers are subject to formal AML/CFT obligations; Bar is self-regulatory and does not conduct proactive examinations. - Auditors: not subject to mandatory CDD for AML; MoF professional rules include KYC responsibilities. - Real estate agents and dealers in precious metals and stones - Real estate agents: licensing to be reintroduced as of February 2005; licensing will apply to legal entities; individual agents subject to registration. - Dealers in precious metals and stones: about 100 entities licensed by MoF; not subject to current AML law. - Recommendations (selected) - Extend AML Law preventive measures to lawyers, auditors, real estate agents, and dealers in precious metals and stones for activities enumerated in R.12. - Establish clear responsibility for monitoring and enforcing AML obligations. - Adopt stronger enforcement sanctions including authority to assess administrative fines. - Provide training to regulators and regulated parties. - Consider amending lawyers’ Code of Ethics and Rules for Auditors to clarify reporting and prohibit lawyers/auditors from engaging in financial transactions for or on behalf of clients. - Amend Article 186 of the CC to criminalize failure to report ML. - FATF/DNFBP ratings - R.17 — Compliant (competent authorities exist) - R.24 — Noncompliant - R.25 — Noncompliant - R.16 and R.12 related aspects — Noncompliant/Partially compliant as detailed above. ### Legal persons, beneficial ownership, and non-profit organizations - Company registration and beneficial ownership - Centralized company registration system includes ownership and control details but not always sufficient to identify ultimate beneficial owner for foreign-owned companies. - Recommendation: ensure completeness and accuracy of company registration information including verified beneficial ownership details. - R.33 — Partially compliant. - Legal arrangements - Mission informed legal arrangements, other than legal persons, do not exist in Belarus. - R.34 — Not applicable. - Nonprofit organizations (NPOs) - NPOs required to be registered; foreign nonreimbursable assistance subject to Presidential Decrees No. 24 and No. 537 (monitoring and approvals). - Charitable organizations must apply to Presidential Administration for approval of donors and for tax/duty exemption. - Oversight examined once a year by tax authorities and DHA, and twice a year by the SCC. - LEAs have not detected fund-raising by NPOs for terrorist activities. - SR.VIII — Compliant. ### Mutual Legal Assistance, extradition, and international cooperation (R.32, 36-39, 40, SR.V) - Mutual Legal Assistance (MLA) - Law No. 284-3 of May 18, 2004 (ILA Law) provides for legal assistance on treaty basis or reciprocity. - Article 4 of ILA Law: possible to trace, identify, seize and confiscate proceeds of crime and assets used for or intended to be used for FT at request of another country. - Authorities stated legal assistance is provided within one or two weeks of receiving the request; mission unable to verify due to lack of statistics. - Absence of centralized statistics on MLA requests and outcomes. - Recommendations: maintain centralized annual statistics on MLA; enact draft law on international legal assistance; adopt administrative procedures to prevent undue delays. - R.36 — Largely compliant; R.32 — Noncompliant (absence of statistics). - Extradition - Extradition generally possible on treaty basis or reciprocity; Article 7 of CC addresses extradition. - All crimes are extraditable including ML and FT-related offences. - Belarusian nationals may not be extradited except as provided by international treaties. - No separate extradition law; ILA Law silent on some procedural aspects; no statistics on extradition requests. - Recommendations: establish centralized statistics on extradition requests; finalize and enact draft amendments to CPC; establish administrative procedures to ensure extradition requests handled without undue delay. - R.39 — Largely compliant; R.32 — Noncompliant. - Other international cooperation - Cooperation under AML Law and CT Law on basis of treaties or reciprocity. - NBRB has cooperation agreements with several countries; cooperation against terrorism based on bilateral agreements and CIS agreements. - R.40 — Compliant; SR.V — Largely compliant. ### Ratings summary and high-priority recommended action plan (selected) - Selected ratings (exact phrasings as in source) - R.1 — Partially compliant - R.2 — Largely compliant - R.3 — Partially compliant - R.4 — Compliant - R.5 — Partially compliant - R.6 — Non-compliant - R.13 — Non-compliant - R.26 — Non-compliant - SR.II — Non-compliant - SR.III — Non-compliant - SR.IX — Non-compliant - Table 3: Recommended Action Plan (selected high-priority actions) - Criminalization of ML: - Amend Article 235 CC to reduce burden of proof as to mens rea. - Clearly criminalize all types of ML as required by Vienna and Palermo Conventions. - Remove Remark 1 and Remark 2 from Article 235. - Criminalize insider trading and market manipulation. - Establish that intentional element may be inferred from objective factual circumstances. - Establish criminal liability of legal entities or civil/administrative liability. - Criminalization of FT: - Criminalize FT as a separate and autonomous offense. - Introduce preventive measures against FT. - Amend Article 285 to establish liability for recruitment/payment to join terrorist organization. - Confiscation, freezing and seizing: - Make confiscation obligatory upon conviction for ML or FT. - Make property of legal entities subject to confiscation upon conviction. - Extend provisional measures in OCC Law to all crimes including ML and FT. - Establish freezing, seizure and confiscation provisions for FT. - FIU (DFM): - Enact draft AML Law to provide DFM framework. - Expedite steps to gain Egmont Group admission. - Consolidate DFM as single centralized FIU. - Provide for electronic submission of STRs. - Improve safeguards and provide adequate funding and enhanced electronic database. - DFM should maintain statistics on all STRs. - Law enforcement and prosecution: - Establish mechanism to improve coordination between agencies investigating ML offences. - Provide training for judges and prosecutors on ML, FT and asset recovery. - Compile and maintain relevant statistics. - Cash couriers: - Provide AML/CFT training to customs officers. - Acquire equipment for centralized database of cash movement declarations. - Extend requirements to bearer negotiable instruments. - Reassess and enhance border controls, particularly on Russian border. ### Key exact numeric values and thresholds (as recorded) - 2,000 base units (approximately US$23,000) — one‑time transaction identification threshold. - 20,000 base units — threshold for legal entities in Article 4 reporting conditions. - 1,000 base units (approximately US$11,500) — casino winnings reporting threshold. - 10 years — record-keeping minimum period referenced in Article 4 for registers and archives (and banks’ practical retention). - 20 years — retention for agreements/contracts relating to transactions in foreign currency (per Article 4 wording). - five years — mission recommendation for minimum retention period to accord with FATF R.10. - 2–3 year cycle — NBRB comprehensive inspection frequency for each bank. - 17 — number of general NBRB inspections in 2004. - 129 — number of specialists, inspectors, and analysts in BSD; 62 at headquarters in Minsk; 67 across 6 regional offices. - 15–25 — number of inspectors typically involved in a one‑month NBRB inspection. - 34 — total CoS staff. - 6 — number of companies offering life policies in insurance sector. - 36 — number of items in MoF "Rules for Auditing Activity". - 5 percent and 10 percent — thresholds referenced in ownership/control and fit-and-proper discussion (BC defines insiders as promoters holding more than five percent; fit-and-proper criteria applied for holdings of more than 10 percent). - DFM reporting statistics (see DFM section above for exact figures). *Source: assessment based on laws, regulations, and information obtained by the assessment team during its mission from December 2–16, 2004.* ### 1. An assessment of the anti-money laundering (AML) and combating the financing of ### 1. An assessment of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Belarus ### Executive summary and overall assessment - Assessment basis: Forty Recommendations 2003 and Eight Special Recommendations on Terrorist Financing 2001 of the FATF; prepared using the AML/CFT Methodology 2004. The assessment included Special Recommendation IX of October 2004 concerning cash couriers. - Mission dates: information obtained during the mission from December 2–16, 2004. - Assessment team composition: IMF staff and an expert, specifically Mr. Terence Donovan, Mr. John Abbott (MFD), Mr. Antonio Hyman Bouchereau (LEG), and Mr. Andrea Nicolai (Italian FIU). - Principal conclusion: Belarus has many elements of a modern AML regime (ML criminalized; financial institutions obliged to monitor and report; detailed compliance supervision; on-site examinations; two agencies exercise financial intelligence functions; ML offenses investigated and successfully prosecuted; some capacity for international cooperation). However, gaps, misalignments, and incomplete implementation significantly undermine full effectiveness and several aspects fall well short of FATF standards. ### Key shortcomings identified - Legal and institutional: - The legal framework is incomplete and, in places, misdirected. - Legislation criminalizing terrorist financing as a separate offense has not been adopted. - Multiple agencies with varied primary missions (supervision, intelligence, investigations and law enforcement) are involved with no single institution taking effective primary responsibility for policy coordination or operational administration of the AML regime. - AML objectives are frequently incidental or subordinate to other policy objectives such as tax compliance, foreign currency administration, or general intelligence gathering. - The Department of Financial Monitoring (DFM), the designated FIU, divides essential functions with the Ministry of Taxes and Duties (MTD) and does not have a full range of powers in international cooperation. - A number of DNFBPs are not subject to AML requirements; AML regulations for DNFBPs have not been developed; awareness levels in these sectors are low. - Operational and implementation: - ML concepts, including the nature of a suspicious transaction, are not clearly articulated and are not consistently understood by government officials or financial institutions. - AML objectives and institutional incentives place insufficient emphasis on detection, deterrence, and reporting of truly suspicious transactions. - Financial intelligence analysis is not centralized in a single agency. - Provisions for international cooperation need strengthening. - Additional AML training is needed for government agencies and the financial sector. - Other concerns: - Controls imposed on personal remittances (requiring specific permission to access remittances in excess of US$10, and retention of such remittances in designated individual ‘charity’ accounts pending permission) are causing disruption and risk driving transactions underground. - No indicators of involvement in terrorist financing had come to the attention of the authorities at the time of the mission. - Potential reputational risk from banks operating in Free Economic Zones (FEZ). ### Recommended actions and priority measures - Legislation and institutional framework: - Adopt a revised AML Law (a draft law under consideration addresses many issues). Further improvements suggested include: - introducing a clearer definition of suspicious transaction and reducing emphasis on threshold-limit based reporting; - specifying more fully key components of required preventive measures, including a more explicit statement of the necessary scope of customer due diligence and a requirement for enhanced due diligence; - including more detail on internal controls, a requirement to appoint a compliance officer or money laundering reporting officer at a senior level, and provision for an audit function; - providing for transparency of policy coordination and designating a lead agency responsible for administering the AML law; - providing for the operational independence of the FIU; - reviewing the basis for exclusions from reporting under the law and ensuring strict control over application of exclusions. - Adopt a terrorist financing law in line with the FATF Recommendations. - Amend the Criminal Code to eliminate the current excessive evidentiary burden to obtain an ML conviction. - FIU and information handling: - Consolidate the authority of the DFM as the single, centralized FIU for Belarus. - Provide for electronic submission of suspicious transaction reports (STRs) and provide necessary resources for an enhanced electronic database for analysis. - Take steps necessary to achieve early membership in the Egmont Group. - Supervision, enforcement, and training: - Ensure supervisors of reporting entities issue appropriate implementing regulations covering AML preventive measures and have effective enforcement powers. - Undertake extensive training in identifying, detecting, and reporting suspicious transactions. - Streamline and rationalize operating responsibilities of the numerous agencies involved in the AML regime to reduce administrative burden without loss of essential information. - Reorient institutional objectives to sharpen focus on AML aspects distinct from tax compliance, foreign exchange administration, and general intelligence. - Operational measures on terrorist assets: - Put in place measures to allow freezing of suspected terrorist assets without delay or prior notice. ### General context and governance - Political and legal structure: - Republic of Belarus governed by a President and a bicameral parliament; the President is head of state and of the executive branch and is the dominant power. - Judicial power vested in a court system headed by the Constitutional Court (12 judges: six appointed by the President and six elected by the Council of the Republic). - The Prosecutor General’s Office is headed by the Prosecutor General, who is appointed by the President with consent of the Council of the Republic. - Legal system: civil law. - Transparency and controls: - Belarus subscribed to the IMF's Special Data Dissemination Standard (SDDS) on December 22, 2004. - Continued media reports of lack of transparency and corruption; mid-table in the Transparency International Index for 2004 representing a deterioration over the previous finding. - Economic and financial activity is highly controlled; government agencies have broad powers to intervene in management of enterprises. ### Money laundering and terrorist financing threats, typologies, and vulnerabilities - Perceived predicate offenses linked to ML: - Tax evasion (considered by the authorities to be, by far, the most important predicate for ML). - Customs violations (next in importance). - Fraud and contraband; white collar crime noted as important origin of illegal proceeds. - Officials observed likely links to crimes related to drugs, trafficking in people, and illegal arms dealing. - Customs authorities have intercepted attempts to illegally transport weapons, ammunition, and other military equipment. - Belarus identified as a main crossing point for tobacco products originating in Russia and Ukraine and destined for Western Europe. - ML typologies described: - Use of fly-by-night firms (‘overnight companies’) that are abandoned or collapse before suspicions are raised, making tracing or establishing intent difficult. - Use of lost or stolen passports, credit cards, and false documents to establish such vehicles. - Use of legal entities in Russia, the Balkans, and European offshore centers as counterparties. - Interest-free loans from abroad to gain the use in Belarus of illegal proceeds previously remitted abroad. - Rapid funds transfers through FEZ banks with no apparent economic rationale, raising concern about diversion of illegal Russian proceeds as Baltic banks tighten controls. - False invoicing to convert noncash proceeds into cash, followed by cash transactions to disguise origins. - Cross-border cash movement concerns: - Cross-border cash movements across the Russian border where there are no controls. - Cash withdrawals in rubels (RBL) on international credit cards not subject to controls may act as virtual inward cash couriers. - Inward remittances via Western Union and similar companies have become a concern despite typically small values. - Controls requiring permission to access personal remittances from abroad in excess of US$10 have been imposed, with retention in designated ‘charity’ accounts pending permission—these controls disrupt legitimate beneficiaries and risk reducing transparency. - Data and coordination limitations: - No centralized agency systematically collates AML experience from various law enforcement and administrative units; available information may not be fully comprehensive. ### Financial sector and DNFBP overview (key statistics and structure) - Banking sector: - Total banks with license: 31 active banks licensed to conduct a wide range of commercial banking operations. - Market concentration: the six largest banks make up about 85 percent of total assets of the banking system. - Ownership of six largest banks: five of the six largest are exclusively or mainly state owned. - Largest bank market share: the largest, main domestic savings bank, accounts for about 41 percent of bank assets and holds 63 percent of retail deposits. - FEZ banks: 6 banks operate in the Free Economic Zones (FEZ) and are subject to lower capital requirements and some concessionary tax treatment; they are small and mainly restricted to business with other residents of the FEZ and with nonresidents of Belarus. - Foreign participation: largely confined to smaller banks through joint ventures; no foreign branches authorized. - Money exchange: separately licensed activity, to date authorized only for banks. - Remittance activity: only banks may be agents for money remitters; Western Union is the largest money remitter. - Postal service: the Post Office conducts a large domestic payments system and handles a significant volume of cross-border remittances. - Security authorities' view: expressed confidence that no significant informal transfer activity takes place. - Insurance sector: - Registered insurance companies: 34 registered insurance companies of which 31 are currently licensed and operational. - Government ownership: 3 of such companies are government owned. - Largest insurer: the government owned Belgosstrakh company accounts for approximately 60 percent of the activity of the sector. - Life insurance and pensions: life insurance is not well developed (6 companies provide a narrow range of products); pension products are very limited and there are no investment products. - General insurance: underdeveloped with mandatory coverage (auto, property) accounting for a large share of business. - Reinsurance: limited local reinsurance capacity; firms reinsure excess risk with a variety of Russian and European counterparties. - Regulator: Ministry of Finance (MoF) is the regulator of insurance companies. *Source: assessment based on laws, regulations, and information obtained by the assessment team during its mission from December 2–16, 2004.* ### 16. The securities sector is likewise small with 131 firms licensed to operate in the ### _cr07190 - 16. The securities sector is likewise small with 131 firms licensed to operate in the ### Securities sector and DNFBPs - 131 firms licensed to operate in the securities sector, a number of which are dormant. - Market activity dominated by transactions in government securities and NBRB securities; banks dominate trading in these securities. - Transactions in corporate shares are quite limited; approximately 85 percent of all shares issued are held by the State. - Shares sold for privatization vouchers are frequently subject to trading restrictions. - Securities sector regulated by the Committee on Securities at the Council of Ministers (CoS). - Most important DNFBPs: lawyers, notaries, auditors, real estate agents, and casinos; governed by specific legislation and regulation. - Company formation services provided by lawyers, notaries, and accountants; trust activity is not well developed; asset management appears largely confined to banks. - Dealings in precious metals and stones conducted on a limited scale, primarily by banks under a special license from the NBRB, with nonbank dealers licensed by the MoF. - Approximately 25 casinos operate around the country, none on a large scale and with most activity concentrated in Minsk. - Of DNFBPs, only notaries and casinos are currently subject to the AML Law. - Sector-specific legislation typically provides for regulation and oversight by a competent authority and includes financial controls, reporting, administrative matters, and professional standards that touch on customer identification, internal control arrangements, and record keeping, though not specifically oriented toward AML objectives. ### Legal persons and arrangements - Legal entities in Belarus may be commercial or noncommercial organizations. - Commercial organizations: economic partnerships and societies, production cooperatives or unitary enterprises. - Noncommercial organizations: consumer cooperatives, public, and religious organizations; may perform business activity subject to statutes and purposes. - Legislation may limit some noncommercial organizations to perform entrepreneurial activity only through participation in setting up commercial organizations. - Legal entities of the Republic of Belarus may create amalgamations, including participation of foreign legal entities, as financial, industrial or other economic groups under applicable legislation. - Direct foreign investors may form legal entities of any legal form without restrictions on investment amount. - A company receives the status of a commercial organization with foreign investments if the contribution of a foreign participant is equivalent to at least US$20,000 and its stake in the charter capital is no less than 30 percent. - Commercial organizations with foreign investments may have subsidiaries and affiliates and establish branches and representative offices in Belarus and abroad. ### AML/CFT strategy and priorities - Authorities desire and intend to comply with international standards; drafted a revised AML Law in line with the 2003 FATF Recommendations. - Authorities stated intention to combine in one authority the functions of the FIU. - Current AML/CFT arrangements described as only partially effective; authorities signaled intention to address deficiencies. - Authorities identified particular areas of vulnerability and plan to address them while seeking to implement fully the FATF Recommendations. - Authorities did not indicate intention to apply lighter AML/CFT requirements to lower-risk areas; regulatory approach tends to impose more onerous requirements on perceived high-risk activities (example: small inward funds transfers). ### Preventive measures: scope, thresholds, and oversight - Current AML Law requires banks, nonbank financial institutions and certain DNFBPs to: - record and report financial operations subject to special control; - perform customer identification; - retain records related to foreign exchange transactions for 10 years; - retain other records related to domestic currency transactions for periods specified in legislation on archives and business correspondence; - develop internal policies and internal controls as necessary to comply with the AML Law. - Financial transactions subject to special control include cash and deposit transfers, wire transfers, asset transfers, loans, transfers of movable and immovable property, property donations and grants, provided: - the amount of a single transaction exceeds approximately US$23,000 for a natural person or approximately US$230,000 for legal entities and others, or - when the aggregate amount of several transactions performed within a month by the same person exceed these thresholds. - Financial institutions required to register such transactions in a special data form (SDF) and transmit information to the relevant monitoring agency. - Reporting of financial transactions subject to special control is exempted from secrecy obligations and reporters are exempt from liability for losses and personal damage arising from such reporting. - Tipping off is prohibited. - Oversight of preventive measures allocated among SCC, MTD, and primary functional regulators; implementing regulations issued under Council of Ministers Resolution No. 1411 of September 30, 2000. - MTD has internal policies and procedures to ensure compliance with these regulations. - NBRB has issued implementing recommendations (“Know Your Customer” (KYC) recommendations) to institutions it supervises; recommendations are legally nonbinding but treated as mandatory in practice and sought to be adopted by bank boards into internal ‘normative acts’. - Other functional regulators have not yet issued guidance on implementation of preventive measures. - Preventive measures obligations apply to banks and persons engaged in financial operations in: securities, insurance, investment funds, a range of money service businesses, notaries, communications (post offices), and gambling. - The list does not specifically identify attorneys, real estate agents, or dealers in precious metals and stones; the draft AML law would add these persons as contemplated by the FATF Recommendations. - AML Law does not address scope and content of preventive measures in detail. - Suspicious transactions reporting falls short of FATF Recommendation 13: - AML Law ambiguous on definition of suspicion and which transactions must be reported; - AML Law does not cover terrorist financing nor attempted transactions; - AML Law establishes thresholds rather than covering all transactions. ### Institutional framework for combating ML/TF - NBRB: licensing and supervisory authority for banks; banking services cannot be offered without a license; only banks can offer currency exchange services; remittance services may only be provided by banks or the post office. - Various ministries responsible for licensing and supervision of DNFBPs. - DFM designated FIU for Belarus; in practice FIU functions are carried out by both the DFM and the MTD. - Under the AML Law, the DFM only receives SDFs regarding financial transactions carried out in foreign currency. - DFM represents Belarus in the Eurasian Group Against Money Laundering (EAG). - DFM has applied for membership in the Egmont Group; Russia and Poland sponsored the DFM at the Egmont Group meeting in October 2003. - Draft AML Law provides for reorganization of the DFM with exclusive responsibility for gathering SDFs, analyzing the information and disseminating financial intelligence to appropriate law enforcement agencies (LEAs). - Law enforcement agencies investigating economic crimes operate under supervision of the Prosecutor General’s Office (PGO): investigatory divisions of the PGO, Ministry of Internal Affairs (MIA) investigatory divisions, Financial Investigations Department (FID) of the SCC, and the Economic Security Directorate of the State Security Committee (SSC). - Prosecutor General can assign or reassign investigations and establish joint investigations. - Preliminary investigation of an ML offense initiated by investigatory agency to which the DFM communicates the case, depending on the probable predicate offense revealed by DFM analysis. - MIA investigates economic crimes with foreign elements and handles international cooperation. - FID operates at national and regional level; general competence for investigating offenses against property and economic order; cooperates closely with DFM. - SSC has an Economic Crime Division focusing on methods and trends of economic crimes and communicates schemes to other investigative agencies and the PGO. - Anti-Terrorism Centre of the SSC coordinates preliminary investigations of terrorism-related offences. - Specific responsibilities of investigatory agencies not clearly established by legislation; no precise coordination mechanism for AML/CFT actions. - Recommendation: authorities should establish a mechanism to improve coordination between agencies responsible for investigating ML offences. ### Criminalization of Money Laundering and related legal issues - ML criminalized in June 1999 as "legalization of illegally acquired proceeds" through Article 235 of the Criminal Code (CC). - Scope of predicate offenses for ML: extensive “all crimes” approach covering proceeds from criminal offences and other illegal activity, including civil and administrative. - Evidentiary standard for prosecuting ML: prosecutor required to prove perpetrator had both intent to legalize illegal proceeds and specific knowledge of the predicate offence; a prior conviction for the predicate offense is also required to prove that funds are proceeds of crime. - Article 235 defines ML as: - (i) the intentional performance of financial operations with illegally acquired proceeds, or - (ii) the intentional use of illegally acquired proceeds in commercial or business activity with the purpose of concealing or misrepresenting the nature, source, location, placement, movement, or actual ownership of said proceeds. - Article 235 may not explicitly establish all required offences relating to ML in accordance with the Vienna and Palermo Conventions; appears to limit scope to intentional concealment/disguising and intentional acquisition, possession or use, but does not clearly criminalize intentional conversion or transfer. - Article 2.1 of the AML Law defines “illegally acquired proceeds” as money (Belarusian or foreign currency), securities or other assets, including property rights and exclusive rights to intellectual property obtained in violation of the law. - Article 2.2 of the AML Law defines legalization of illegally acquired proceeds as efforts to make possession, use or disposition of illegal proceeds appear legitimate, including concealment, investment, movement, or concealment, misrepresentation, and submission of false or misleading information about location or true ownership. - Authorities state the offense extends to any type of property that directly or indirectly represents proceeds from illegal activity, but mission informed property cannot be considered proceeds of illegal activity unless established by a court ruling. - Consequently, Article 235 requires a conviction for the predicate offense to prosecute an ML offense; guilt of the person who committed the predicate offense must be established by a conviction. - Remark 1 to Article 235: a person who commits the predicate offense cannot be prosecuted for ML and would only be liable for the predicate offense. - Authorities consider remarks part of legal provisions and applicable. - Mission considers Remark 1 to represent an additional hindrance in proving mens rea for ML; it may impede prosecution and has hindered progress of ML cases. - Legalization of proceeds derived from crimes committed abroad may be prosecuted in Belarus under Article 6 of the CC: - Article 6 covers Belarusian citizens and stateless persons who are permanent residents who committed offenses outside Belarus if acts are offenses where committed and not prosecuted there; - Article 6 covers foreign nationals or stateless persons not permanent residents who committed offenses outside Belarus directed against the interests of Belarus. - Sentences fixed within limits of sanction stipulated in relevant Article of CC, without exceeding sanction provided by law of State where offense committed. - Under Article 6, prosecution for ML may proceed even if underlying act abroad is not a crime under the foreign law if underlying act is against interests of Belarus. - Article 5.2 of the CC: crime considered committed in Belarus if initiated or completed in territory of Belarus or in concert with an accomplice who committed a crime in territory of a foreign State. - Ancillary offences: - Article 14 of the CC: attempt to commit an offence, including Article 235, can be prosecuted. - Article 16.6 of the CC: facilitation or provision of means or assistance can result in accomplice charges; attempt and participation are sanctioned with same penalties as the uncompleted offence; accomplice’s responsibility determined by courts. - Article 235 requires prosecutor to demonstrate knowledge, intent and purpose by proving actual and specific knowledge of the predicate offence. - In practice, preceding conviction for the predicate offense is required to prosecute ML; guilt of predicate offender can only be determined by conviction sentence from a court based on presumption of innocence. - Legal entities are not criminally liable; only physical persons criminally liable under CC. - Article 235 sanctions may be imposed alternatively by a fine, prohibition of holding certain posts or engaging in certain activities, or a prison term of up to four years. *Source: _cr07190 - 16. The securities sector is likewise small with 131 firms licensed to operate in the* ### 1.7 of Decree No. 40 of January 16, 2002 “On additional measures for the regulation of economic relations”, the ### _cr07190 - 1.7 of Decree No. 40 of January 16, 2002 “On additional measures for the regulation of economic relations”, the ### Money laundering (ML): criminalization, mens rea, and prosecutions - Article 235: provides for imprisonment when ML committed; aggravating circumstances allow increased prison term: - repeat offenders, public officials abusing their powers, or when the offense has been committed on a large scale: "two to seven years" - when the offense of ML has been committed by an organized group: "three to ten years, with or without confiscation of property" - Fine under 1.7 of Decree No. 40: "the fine imposed is double the amount of the illegal financial transaction." - Offences in the CC cover a comprehensive range of the designated categories of offences, with the exception of insider trading and market manipulation. - Prosecutions and charging practice: - Number of prosecutions for ML since Article 235 came into effect: "approximately 10 cases per year" (authorities’ information), (all convictions). - Prosecutors frequently charge under Article 236 (criminal liability for storing or selling property obtained illegally, but without intention of laundering), sanction: "one to three years of imprisonment." - Remark 2 to Article 235: - Allows exemption from criminal liability if person voluntarily admits actions and cooperates. - Proceeds of the exempted person can only be seized with view to confiscation if prosecutor applies for seizure before court proceedings initiated. - Authorities report they are not aware that anyone has benefited from the incentive in Remark 2. - Remark 1 to Article 235: - Executor of the crime is not subject to prosecution for ML; mission recommends removal. - Mens rea/inference of intent: - CPC interpreted to allow knowledge, intent or purpose to be inferred from objective factual circumstances. - Unclear how Article 22 CC mens rea rules apply in ML trials; legislation should explicitly permit intentional element to be inferred from objective factual circumstances. - Sanctions: generally adequate for natural persons; no applicable sanctions for legal entities because these are not subject to criminal liability. - Practical prosecutorial approach: if Article 235 cannot be proven, prosecutors typically prosecute under other CC offenses. ### Recommendations and comments on ML (extracted) - Amend Article 235 of CC to reduce exceedingly high burden of proof as to the mens rea on prosecutors for prosecuting ML. - Amended Article 235 should clearly criminalize all the types of ML offenses as required by the Vienna and Palermo Conventions. - Remove Remark 1 from Article 235 to allow prosecution for “self-laundering”. - Remove Remark 2 from Article 235 to eliminate potential hindrance to combat ML. - Criminalize insider trading and market manipulation in the CC, in order for the ML offense to cover all categories of predicate offences. - Establish in legislation that the intentional element of ML offenses may be inferred from objective factual circumstances. - Establish criminal liability of legal entities for ML or, if this is not possible due to fundamental principles of Belarus law, establish civil or administrative liability. ### FATF compliance (ML) - R.1: "Partially compliant" — Incrimination of ML not fully consistent with Vienna and Palermo Conventions. Current framework hinders prosecution of ML offenses. - R.2: "Largely compliant" — Not clear if intentional element of ML offenses can be inferred from objective factual circumstances. Legal entities not criminally liable for ML. --- ### Criminalization of terrorist financing (FT) and counter-terrorism framework - Legal basis: - Article 3.11 of Law No. 77-3 of January 3, 2002 (CT Law): knowingly financing or otherwise assisting a terrorist organization regarded as terrorist activity (intended to cover provision and collection of funds). - CC does not include a separate provision establishing criminalization of FT; Belarus does not have a separate law criminalizing FT. - Current approach: FT not defined and criminalized as a distinct and separate offense from terrorism — inconsistent with FT Convention. - Possible prosecutions via complicity: - Article 16 CC: facilitation, supply of means, or other assistance considered accomplice liability. - Terrorism-related CC articles that could allow complicity charges: Articles 124, 125, 126, 132, 285, 289, 290, 291, 292, 311. - Article 285 (establishment/participation in criminal organization) requires proof that the terrorist organization constitutes a criminal organization as per Article 19 CC. - Gaps identified: - Article 285 would not cover a person who recruits (pays) another to commit a specific terrorist act when the recruiter is not a member of or connected to a terrorist organization. - Legislation does not allow prosecution of a person who provides funds to support a terrorist group’s activities without intending a specific terrorist offense unless group is declared a criminal organization. - Proposed reforms: - Introduction of new Article 289-1 in CC criminalizing FT; recommended to add paragraph ensuring perpetrators can be charged even if funds not used, or not linked to a specific act, or no terrorist act carried out or attempted. - Draft amendment to CT Law to insert term “financing of terrorist activity” defined as “the intentional allocation or collection of money or other property by any means with the aim of using it for terrorist activity”. - Draft Article 23-1 to provide criminal liability for legal entities for FT; proposed mandatory liquidation of legal entities used for FT with confiscation of property in country. - Historical statistic: In the period covering 2002-2004 no criminal cases relating to terrorist activities, their financing, recruitment to terrorist organizations or provision of support were referred to the courts in Belarus. ### Recommendations and FATF compliance (FT) - Recommendations: - Criminalize FT as a separate and autonomous offense from terrorist acts. - Introduce new provisions to make available preventive measures against FT. - Amend Article 285 of the CC to establish liability for recruitment (payment) of a person to be a member of a terrorist organization or for participation in the commission of a terrorist act. - SR.II: "Noncompliant" — FT is not criminalized as a distinct and separate offense from terrorism. --- ### Confiscation, freezing and seizing of proceeds of crime (R.3) - Seizure and confiscation legal basis and practice: - Belarus law enables seizure of any asset in course of investigation on instruction of the PGO; powers to identify and trace property exist. - Article 61 CC: confiscation requires a conviction and may be applied for grave and especially grave offenses committed for the sake of profit, only in cases specified in CC; Article 61.2 CC bars confiscation as supplementary punishment to a fine or correctional work. - Article 98 CPC: confiscation of tools of the crime belonging to the accused; Article 98.4 gives victims’ rights precedence over State for damages; only balance subject to confiscation. - Article 61.6 CC: confiscation applies to instrumentalities, articles seized, property acquired illegally, items directly involved in crime; urgent seizure measures may be applied without prosecutor’s approval but prosecutor must be notified within 24 hours. - Article 235 CC: confiscation of proceeds of illegally acquired activity is an optional sanction upon conviction for ML. - Article 1.9 of Decree No. 40 of 2002 and Article 11 of Law No. 47-Z of June 26, 1997 (OCC Law) provide for confiscation of earnings/income obtained from criminal activity. - Article 132 CPC: investigator/prosecutor/court authorized to seize property to ensure execution of civil suit sentences, penalties, or possible confiscation. - Article 171 CC and Article 11 OCC Law: invalidation of contracts/transactions carried out with false/fictitious purposes or for ML purposes. - Article 10 OCC Law: special investigative divisions authorized, prior to initiation and upon prosecutor sanction, to seal and place under guard rooms with documents and assets up to ten days; urgent measures possible with prosecutor notification within 24 hours. - Article 8.4 AML Law: government bodies monitoring financial operations are required to suspend detected unlawful transactions and take measures or send materials to prosecutors or investigative authorities; no established procedures for suspending unlawful transactions have been issued. - Practical observations: - Confiscation system is conviction-based and available for serious criminal offences including ML. Civil forfeiture not available. - For ML, Article 235 does not establish mandatory confiscation; confiscation discretionary by court in specified aggravating cases, but authorities indicate confiscation generally applied upon conviction. - Confiscation from third parties appears possible; rights of bona fide third parties are not expressly provided in legislation. - Provisional measures in OCC Law adequate for organized crime/corruption but limited to those subjects. - Proposed amendments and draft provisions: - Draft Article 289-1 for CFT provides for mandatory confiscation as complementary sanction for intentional FT; amendment should include freezing, seizure and confiscation provisions for FT. - Draft Article 23-1 in CT Law to subject property of legal entities managed or controlled by person convicted for FT to confiscation upon liquidation. - Recommendations: - Amend Article 235 CC to make confiscation an obligatory sanction upon conviction for ML or FT. - Make property of legal entities subject to confiscation upon conviction for ML or FT. - Extend powers to execute provisional measures in the OCC Law to investigations related to all crimes, including ML and FT. - Amend CC to make all acts, contractual or otherwise, carried out for ML purposes invalid (based on Article 11 OCC Law). - Establish provisions regarding freezing, seizure and confiscation of funds or other assets related to FT. - R.3: "Partially compliant" — Confiscation of funds or other assets related to FT not provided in legislation. Rights of bona fide third parties not expressly provided. --- ### Freezing of funds used for terrorist financing (SR.III) - Legal and practical situation: - No laws or regulations regarding freezing funds/assets belonging to terrorists or terrorist organizations. - In practice, freezing required by NBRB Resolution No.10 of January 28, 2000 ("On the suspension of Debt and Credit Transactions on Accounts of Terrorists, Terrorist Organizations, and Persons associated to them") issued under Article 3 of the BC; instructs banks to suspend debit and credit transactions on accounts of terrorists/designated persons based on UNSC lists and lists issued by individual countries (MFA circulates lists to NBRB and banks). - Lack of detailed procedures: unclear bank actions after detection; absence of guidance on obligations, procedures to challenge or lift freezing, or duties/powers of SCC, DFM, MIA, and PGO. - DFM lacks authority to order freezing where grounds to suspect funds intended to be used for terrorism; DFM unable to order freezing in a bank absent specific mechanisms. - Authorities state freezing under general rules for legal assistance could apply to funds held in Belarus belonging to persons or entities associated with terrorist acts. - No terrorist assets detected in Belarus as of assessment date. - Recommendations: - Establish specific legal requirement to freeze terrorist assets without delay and without prior notice to persons designated in UNSC and national lists; include procedures to unfreeze assets inadvertently affected. - Establish duties and powers of SCC, DFM, MIA, and PGO regarding freezing suspected terrorist assets. - Provide the DFM with authority to order freezing of funds and other property where there are grounds to suspect intended use for terrorism. - SR.III: "Noncompliant" — No legislation regarding prompt freezing of terrorist property. --- ### The Financial Intelligence Unit (DFM) and its functions (R.26, R.30 & R.32) - Institutional arrangement: - Typical FIU functions in AML Law carried out by both SCC and MTD; DFM established within SCC by Presidential Decree 408 of September 14, 2003 as designated FIU. - Reporting entities required by Article 3.2 AML Law to submit SDFs regarding financial operations in: - local and foreign currency to the tax authorities - financial operations in foreign currency to the SCC - DFM structure: Information and Technological Division (seven persons), Analytical Division (eight persons), Coordination and International Cooperation Division (seven persons). - Operational capabilities and limitations: - DFM lacks comprehensive guidance to reporting entities; only a list circulated to banks with examples of transactions requiring reporting. - Draft joint Resolution of the Council of Ministers and the NBRB in preparation includes SDF formats and guidance but needs further development. - Presidential Decree No. 408 Article 5: all government authorities, legal entities and natural persons must provide information and access to information systems/databases to DFM. - DFM has access to databases maintained by SCC, MTD, and MIA; able to obtain additional information from reporting entities and government agencies. - Regulation on DFM: DFM refers info on financial transactions to investigative agencies where sufficient grounds for ML exist; DFM has specific procedures for this process. - DFM does not enjoy budgetary independence from SCC but reportedly free to select staff and decide when to disseminate information independent of SCC Chairman. - Critical limitation: AML Law requires reporting entities to submit to SCC only SDFs on operations in foreign currency — DFM’s inability to receive SDFs on local currency seriously restricts its FIU role. DFM receives some local currency suspicious transactions where MTD forwards them. - DFM conducts duties professionally; coordinates with other authorities and foreign FIUs; in process of signing bilateral agreements and memoranda of understanding. - No specific provisions/guidelines regarding information sharing with foreign FIUs; shared on basis of reciprocity and spontaneously. - Safeguarding of information: written procedures exist but need improvement. - Statistics (DFM and MTD reporting activity): - First ten months of 2004: DFM received and processed "18,283 SDFs" (foreign currency); "14,500 SDFs" from banks. - Of total SDFs to DFM, "2,290" warranted additional information from banks. - DFM received "131" submissions on suspected illegal activity from other agencies. - In 2004 DFM received "13" submissions on suspected ML from foreign FIUs and forwarded "32 SDFs" to foreign FIUs. - "2,563 (or approximately 11 percent of the total)" SDFs submitted to the DFM concerned transactions below thresholds in AML Law. - MTD SDFs received between 2000 and 2004: - 2000: "9,739" - 2001: "52,927" - 2002: "49,954" - 2003: "79,616" - 2004: "93,561" - Of the 93,561 SDFs to MTD in 2004: - "13,765 (14.7 percent)" related to individuals transactions >= "2,000 base units" - "51,903 (55.5 percent)" were other entities transactions >= "20,000 base units" - "27,893 (29.8 percent)" concerned transactions below these thresholds - Between 2000–2004, MTD-originated criminal cases filed: "24 criminal cases" (fraud 4, property damage 2, nonreporting operations in foreign currency 1, smuggling 5, illegal entrepreneurship 4, proceeds of crime 4, tax evasion 2, forgery 2). - Capacity needs and reforms: - DFM moving in right direction; needs additional staff, upgraded IT, training, and resources. - No specific provisions for feedback from LEAs to DFM on investigations; feedback could improve DFM case selection. - Planned computerized database for SDF processing but lacking financing. - Recommendations: - Enact draft AML Law to provide DFM with framework to perform FIU functions effectively. - Expedite steps to gain admission to the Egmont Group. - Consolidate authority of DFM as single, centralized FIU for Belarus. - Provide for electronic submission of STRs. - Improve safeguards of sensitive information received by DFM. - Provide adequate funding, staffing and resources for enhanced electronic database for analysis to DFM. - DFM should maintain statistics on all STRs, not only those relating to transactions in foreign currency. - FATF compliance: - R.26: "Noncompliant" — DFM is not single centralized FIU and only able to receive disclosures on transactions in foreign currency; DFM has not issued comprehensive guidance; safeguard improvements needed. - R.30: "Noncompliant" — Operational independence and autonomy of DFM with regard to SCC not officially established. - R.32: "Noncompliant" — DFM should keep statistics on all STRs including domestic and foreign currency transactions. --- ### Law enforcement, prosecution and investigative framework (R.27, R.28, R.30 & R.32) - Investigative responsibilities and coordination: - Investigations of economic crimes under PGO supervision carried out by investigatory divisions of PGO, MIA, FID and SSC as assigned in CPC. - SCC (FID) has main responsibility for domestic economic crimes; FID has offices in all regions with investigatory and analytical divisions. - MIA investigatory divisions handle economic offenses requiring foreign authority interface; MIA has signed over "140" interdepartmental agreements with foreign Interior Ministries. - SSC Economic Crime Division studies methods/trends but focuses on criminal behavior affecting economy rather than ML methods. - PGO coordinates all investigations per Article 22 of Investigations Law and can assign/reassign or establish joint investigations. - Preliminary ML investigation initiated by agency to which DFM communicated case depending on likely predicate offense. - Ad-hoc working groups may be established to conduct investigations. - Investigative timeframes and powers: - Preliminary investigations should be concluded within "two months" but can be extended by Prosecutor General: - District Prosecutor supervised investigations: extended "six additional months" - Regional Prosecutor supervised: extended "nine additional months" - Prosecutor General supervised: may be extended indefinitely - Investigators authorized to delay arrest and seizure for investigative purposes (Articles 36, 126, 132 CPC). - Articles 17 of Law No.369-3: SCC officials can enter premises (excluding dwellings) and access stores/production areas to check cash, securities, stocks and other valuables. - Article 14 SSA Law: investigatory agencies can compel production and search of records, business correspondence, account files. - Article 4 Investigations Law and Article 14 SSA Law: investigative agencies can use overt and covert techniques, controlled delivery, surveillance, infiltration, wire-tapping, among others. - Confidentiality and training: - Investigators required to maintain confidentiality (Article 17 Investigations Law); PGO and MIA officials responsible for protection of information submitted to prosecutor (Article 22 Investigations Law). - Article 6 AML Law: employees of courts, prosecutor’s offices, preliminary investigative bodies, and foreign exchange control organizations liable for unauthorized disclosure of legally protected information. - Part 4 Regulation on Use of SDF: confidentiality guaranteed by recipient except as established by legislation. - Internal training programs exist; no specialized AML/CFT training for staff and no specific plans for judges; professional development plan at Belarusian State University includes AML/CFT topics. - Statistics and effectiveness: - No statistics available on amounts resulting from seizure and confiscation, generally or for ML specifically — hampers assessment of effectiveness. - Recommendations: - Establish mechanism to improve coordination between agencies investigating ML offences. - Provide training for judges and prosecutors on ML, FT and seizure, freezing and confiscation of proceeds of crime or property to be used to finance terrorism. - Compile and maintain relevant statistics. - FATF compliance: - R.27: "Compliant" - R.28: "Compliant" - R.30: "Noncompliant" — Operational independence and autonomy of DFM with regard to SCC not officially established. - R.32: "Noncompliant" — Lack of consistent statistics on ML investigations, prosecutions and convictions, and property seized and confiscated. --- ### Cash couriers and cross-border movement of currency (SR.IX) - Legal measures: - Joint Resolution No. 73/38 of April 30, 2004 (NBRB and Customs) measures to detect/monitor physical transportation of currency across Belarus borders — applicable only to individuals (not freight or containers). - Declaration requirements: - Import of cash exceeding equivalent of "US$3,000" in foreign currency: compulsory written declaration. - Import of cash "US$3,000 or lower" in foreign currency, or equivalent of "500 base units or lower in RBL": written declaration voluntary; verbal disclosure may be requested. - Export of cash exceeding equivalent of "US$3,000" in foreign currency: compulsory written declaration. - Export of cash "US$3,000 or lower" in foreign currency, or equivalent of "500 base units or lower in RBL": written declaration voluntary; verbal disclosure may be requested. - Import exceeding equivalent of "US$10,000" in foreign currency: requires customs declaration or foreign exchange certificate confirming import from Customs Union member (Kazakhstan, Kyrgyzstan or Russia), or bank authorization from Customs Union country. If amount imported is "US$10,000 or lower", such documents not required, but written declaration necessary if amount exceeds "US$3,000". - Citizens of Customs Union countries subject to same foreign currency rules but not restricted for import/export of RBL to/from Customs Union countries; no written declaration required for RBL. - Article 193.9 Administrative Code: sanctions for false declarations or failure to declare include fines, with or without confiscation of cash; criminal proceedings may be initiated for other infractions detected. - Operational practice: - Customs Code authorizes officers to request origin/use information; officers may seize and detain cash for nondeclaration or false declarations, but no specific authority solely to ascertain ML/FT evidence. - Customs do not conduct follow-up investigations (handled by SCC or MIA investigatory units); detentions may follow LEA information; coordination via interdepartmental agreements. - Declarations completed by hand; no centralized database; measures do not specifically reference bearer negotiable instruments (apparently apply only to currency). - International cooperation and capacity gaps: - Customs active in World Customs Organization; Belarus party to Convention on Mutual Administrative Assistance in Customs Matters (Johannesburg Convention) since June 2004; bilateral customs treaties with CIS and several European countries and the United States. - Concerns about cross-border cash movements, especially Russian border where no controls; needs for technical resources and equipment for effective control. - Customs have necessary software for centralized database but lack complementary equipment. - Recommendations: - Provide AML/CFT training to customs officers. - Acquire equipment to run centralized database to analyze cash movement customs declarations. - Extend requirements and powers to include bearer negotiable instruments. - Provide Customs authority to seize and detain cash to ascertain whether evidence of ML or FT may be found. - Reassess and enhance border controls over movements of cash and negotiable instruments, particularly on Russian border. - Make information collected by Customs consistently available to the DFM. - SR.IX: "Noncompliant" — Measures in place not applicable to bearer negotiable instruments. --- ### Preventive measures — Financial institutions and customer due diligence (R.5–R.8) (partial content) - General approach: - At this stage of AML/CFT development, no simplified or reduced measures applied to low-risk areas; focus on establishing measures and structures aligned with FATF Recommendations. - Customer due diligence (CDD): - Article 3.4 AML Law: persons engaged in financial operations (includes all financial institutions) required to "maintain registers containing information about clients" — law lacks detailed CDD requirements required by FATF R.5. - Detailed customer identification fields included in SDFs to be sent to DFM and MTD for transactions subject to special controls. - Banks: - CDD requirements mainly in NBRB's know-your-client (KYC) recommendations (updated August 2003); recommendations do not have direct force of law but are treated as mandatory in practice by supervised institutions. - Recommendations are reasonably comprehensive; no explicit prohibition on anonymous accounts but paragraph 8 implies identification requirement; Articles 194–196 BC provide for a form of bearer account and AML Law includes specific controls for them. - Banks report anonymous, bearer, and numbered accounts do not exist in practice. - NBRB recommendations require banks to implement criteria/procedures (paragraph 9) within internal control policy (paragraph 4) at operational and management levels (paragraph 7); detailed documentation and verification measures for (i) individuals, (ii) legal entities and individual entrepreneurs, and (iii) correspondent banking accounts; banks to develop account-opening questionnaires for each category. - Identification for individuals: - For individuals, basic identification is by passport, which all citizens of Belarus must carry from the age of [content truncated at supplied end] *Source: _cr07190 - 1.7 of Decree No. 40 of January 16, 2002 “On additional measures for the regulation of economic relations”, the* ### 16. The passport includes a number of other independent verifications, including the current official residence of ### _cr07190 - 16. The passport includes a number of other independent verifications, including the current official residence of ### Customer identification, CDD, and account opening - Passport data may be sufficient for identification for a one-time transaction not exceeding 2,000 base units (approximately US$23,000). - Banks are recommended to carry out a risk assessment; where risk is high, to seek references, identify the source of funds to be placed, and the source of income. - For legal entities, recommendations list details to be recorded from foundation documents and tax identification and call for enhanced due diligence; banks are to demand a wider range of documents describing the client and the nature and turnover of the business, particularly expected dealings in cash. - No separate legal requirement identified to verify that persons operating accounts on behalf of legal entities are authorized to do so, but this is normal banking practice in Belarus (including requiring specimen signatures). - No requirements are specified for identifying beneficial owners; banks are instructed to understand and keep records of ownership and control structure of legal entities but not explicitly to identify the ultimate beneficial owner in complex corporate structures. - Identification documents are required for withdrawals; reidentification for withdrawals and for accounts inactive more than three months for legal entities (mandatory closure procedure commenced on approval of tax authorities). - Some large numbers of personal accounts date from the Soviet era; balances typically very small and withdrawals require reidentification. ### Enhanced due diligence, PEPs, and high-risk categories - No specific requirements or recommendations for enhanced due diligence for politically-exposed persons (PEPs), foreign or domestic. - NBRB recommendations call for special attention to legal entity clients from countries associated with drugs or terrorism, from offshore zones, or those involved in trust management, charities or casinos; simplified CDD measures do not apply. ### Correspondent banking and new technologies - Paragraph 17 of NBRB recommendations calls for special attention to correspondent banking relationships, with a three-tier quality classification; however essential criteria are missing: no explicit requirement for senior management approval and no reference to the AML/CFT regime of the correspondent bank. NBRB plans to issue new recommendations with limits on amounts in correspondent accounts; current recommendations make no reference to “payable-through accounts.” - No specific requirements addressing risks arising from new technologies. Some banks offer internet banking, but none allows non-face-to-face account opening: potential clients must attend in person to open an account. - Recommendation from mission: introduce requirements for risk management of non-face-to-face business. ### Record keeping and wire transfer rules - Article 4 of the AML Act requires covered persons to maintain registers containing information about clients, archives of clients accounts and original documents pertaining to financial operations in foreign currency from account opening and for 10 years following closing of the account; documents such as agreements and contracts relating to transactions in foreign currency are to be held for 20 years. Interpretation of scope (foreign currency vs all clients) unclear. - In practice, banks keep all records for a minimum period of 10 years (and longer where required). - No specific AML Law or NBRB requirements on information to be provided for wire transfers; in practice NBRB confirms mandatory completion of every field in outgoing SWIFT messages. Instruction on bank transfers (Board of NBRB No. 66 dated March 29, 2001, points 49 and 52) requires beneficiary-bank measures to ascertain identity where name/account mismatch; if unsuccessful, funds must be returned. - No de minimus threshold applied for wire transfers. - Mission recommendations: revise AML Law to require retention no less than five years; introduce specific requirements for originator information for wire transfers in line with SR.VII. ### Monitoring of transactions, thresholds, and reporting - Article 4 of the AML Law lists operations subject to special controls (reporting to FIU if above specified thresholds). Controlled transactions to be reported within 24 hours, but only if they exceed thresholds which are high in Belarus. - Article 4.3.3: international transfers to natural persons and legal entities registered in offshore zones or to accounts in such zones are subject to special controls. Article 4.3.4: same for transfers from regions with indications of links to illegal drugs, arms, or international criminal activity. - Current practice: banks ensure transactions are supported by documentation for tax and foreign currency monitoring; a legal entity may hold a current account at only one bank (proposal to liberalize). - Mission recommendation: introduce specific requirement for special attention to complex or unusual transactions with no apparent economic or lawful purpose; provide for special attention to dealings with countries that do not fully apply FATF Recommendations. ### Suspicious transaction reporting (STR) and reporting regime - Article 4 provides for submission to the MTD (domestic and foreign-currency transactions) and to the DFM (foreign-currency transactions) of reports in a standard format within 24 hours of transactions subject to special controls. These provisions do not equate to an STR regime as envisaged by FATF. - Thresholds: single operation amounts to be reported if exceeding 2,000 base units for a natural person (approximately US$23,000) or 20,000 base units for legal entities; several transactions aggregated within a month exceeding these thresholds also trigger reporting. - In practice some reporting entities forward SDFs for transactions below threshold (about 10 percent of SDFs received by DFM are below threshold). - No requirements for attempted or refused transactions to be reported. - Belarus does not yet have a terrorist financing law; draft exists but not enacted; no separate basis to file reports of suspected FT unless linked to ML and covered by SDF reporting requirements. - Article 6 of the AML Law provides exemption from liability for lawful fulfillment of reporting obligation "provided that in this process there has been no violation of the procedure for the performance of these actions established by the legislation" — wording does not correspond directly to FATF R.14 but could be interpreted as equivalent protection. - Article 3.5 prohibits disclosure of data regarding transfer of information to specified authorities; unclear whether FIU is included; law lacks a clear prohibition on tipping off. - Mission recommendations include: amend reporting requirement to include reporting without delay to DFM of all suspicious transactions regardless of size or currency; provide that STR filing is necessary in case of suspicion of ML or FT; amend law to provide clearer prohibition on tipping off; extend legal protections for those reporting to DFM to cover all reporting even below threshold; issue comprehensive AML/CFT guidance to reporting entities; enact FT Law. ### Compliance with FATF Recommendations (selected R.# statuses as in source) - R.4: Compliant - R.5: Partially compliant — most criteria addressed in recommendations treated as mandatory in practice but lacking express force of law in certain cases; some elements yet to be introduced (e.g., beneficial owners). - R.6: Noncompliant — no requirements in place for PEPs. - R.7: Partially compliant — requirements for assessing correspondents exist but do not meet FATF standard fully. - R.8: Noncompliant — no AML/CFT requirements for risks from internet or electronic banking. - R.9: Not applicable — no provision for reliance on intermediaries. - R.10: Noncompliant — mission could not establish that record retention requirements met R.10. - SR.VII: Noncompliant — no specific legal requirements for outbound wire transfers; incoming transfers fall short. - R.11: Partially compliant — strong measures in place but wording does not correspond directly with R.11. - R.13: Noncompliant — current provisions do not constitute requirement to report all suspicious transactions without minimum threshold to an FIU. - R.14: Partially compliant — "no tipping off" exists but lacks precision. - R.15: Partially compliant — NBRB recommendations useful but do not cover all essential criteria; not all elements expressly included. - R.16: Noncompliant — DNFBPs and other entities lack full internal-control and reporting requirements; where instituted (notaries, casinos) scope limited. - R.17, R.23, R.29, R.30: variously Partially compliant / Not applicable / Compliant / Partially compliant as detailed in source text. ### Supervisory framework, sanctions, and on-site/off-site work - NBRB sanctions for violations include financial penalty and/or suspension of license to engage in certain banking operations for up to one year; in certain circumstances removal of chief executive, suspension/withdrawal of banking license, temporary management by NBRB, and sanctions against officers as well as the bank. - Article 135 of the BC lists remedial and sanction powers (require implementation of financial recovery measures; propose replacement of managers; require removal of bank governor; require reorganization; change economic standards for up to one year or until remedy; ban on opening subsidiaries for up to one year; suspend licenses for specific banking transactions for up to one year or until remedy; revoke licenses; commit bank to temporary management by NBRB). - NBRB has applied fines for breaches but not yet for AML/CFT breaches because NBRB rules are recommendations and not sanctionable as law. - Supervisory resources and activity: Banking Supervision Department (BSD) consists of 129 specialists; 62 at headquarters in Minsk, 67 across 6 regional offices. Typical NBRB inspection lasts approximately one month with 15–25 inspectors; 17 general inspections in 2004. - CoS has 34 staff and indicated resource constraints to address AML/CFT. - Insurance supervision by MoF: on-site inspections prepared annually, inspections no more often than once every two years; in practice interval can exceed three years. - Mission recommendations: update on-site and off-site supervisory practices to include full FATF 40+9 aspects; clarify CoS role in securities AML/CFT; assure independence of NBRB decision making; provide additional resources (especially CoS). ### Designated Non-Financial Businesses and Professions (DNFBPs) - Only casinos and notaries have mandatory AML/CFT obligations under current law; other DNFBPs (lawyers, auditors, real estate agents, dealers in precious metals and stones) are subject to licensing/regulation but not mandatory AML/CFT CDD or reporting obligations. - Casinos: passport or drivers license identification on entry; winnings of 1,000 base units or more (approximately US$11,500) are subject to special control and must be reported to MTD; all winnings require identification; no mandatory record retention period specified; close monitoring and frequent inspections. - Notaries: notarized transactions require passport identification for individuals; for transactions over 2,000 base units a tax-certificate of declared source of funds is required; daily register maintained as permanent record. - Lawyers: public lawyers regulated by MoJ, private lawyers by Republican Bar; neither public nor private lawyers are subject to CDD requirements for AML/CFT; strong confidentiality rules; professional practice indicates lawyers typically follow bank-like identification practices but no formal AML/CFT obligations — deemed a significant gap. - Auditors: not subject to mandatory CDD for AML; MoF professional rules (36 Rules for Auditing Activity) include KYC responsibilities; auditors typically have strict account opening procedures. - Real estate agents: not subject to CDD/record-keeping for AML; customary checks on ownership and buyer capacity but not source of funds. - Dealers in precious metals and stones: banks licensed by NBRB follow bank CDD; other dealers licensed by MoF are not subject to AML/CFT obligations though MoF maintains tight controls; Kimberly Process applies to diamonds. - Mission recommendations for DNFBPs: broaden AML Law CDD and record-keeping to include lawyers, auditors, real estate agents, and dealers in precious metals and stones when engaged in activities enumerated in R.12; issue sector-specific CDD guidance; extend CDD to beneficial owners and ongoing due diligence; mandate record retention of five years. ### Internal controls, compliance, training, and audit - Article 3.6 of the AML Law requires reporting institutions to define principles and develop regulations for internal monitoring but only for operations subject to special controls; law does not cover full FATF R.15 essential criteria. - NBRB KYC recommendations require each bank to elaborate an internal document covering client identification, identifying/reporting suspicious transactions, and record keeping; appointment of a responsible person required but not specified to be at senior management level; internal audit required; annual independent external audit required. - Training: mission found need for more extensive and formalized AML/CFT training programs for staff and supervisors. - For DNFBPs, no specific rules yet issued requiring AML/CFT safeguard programs, though a draft joint resolution of Council of Ministers and NBRB is under development addressing internal controls and reporting. - Mission recommends implementing regulations requiring all parties covered by AML Law (other than those supervised by NBRB) to adopt AML/CFT compliance programs including internal policies, employee screening, ongoing training, and an audit function; and DFM or functional regulators to issue AML/CFT guidance for DNFBPs. ### Money or value transfer services (MVTS) - Most MVTS provided only by/through banks; Post Office operates domestic and international payments service (foreign exchange transactions authorized under license by NBRB). - Banks authorized to issue credit/debit cards and electronic funds; clearing performed by processing centers (including outside Belarus); NBRB designated as settlement bank for the plastic card market. - Authorities not aware of organized informal remittance systems operating in Belarus. - SR.VI: Compliant. ### Key exact numeric values and thresholds (as given) - 2,000 base units (approximately US$23,000) — one‑time transaction identification threshold. - 20,000 base units — threshold for legal entities in Article 4 reporting conditions. - 1,000 base units (approximately US$11,500) — casino winnings reporting threshold. - 10 years — record-keeping minimum period referenced in Article 4 for registers and archives (and banks’ practical retention). - 20 years — retention for agreements/contracts relating to transactions in foreign currency (per Article 4 wording). - five years — mission recommendation for minimum retention period to accord with FATF R.10. - 2–3 year cycle — NBRB comprehensive inspection frequency for each bank. - 17 — number of general NBRB inspections in 2004. - 129 — number of specialists, inspectors, and analysts in BSD; 62 at headquarters in Minsk; 67 across 6 regional offices. - 15–25 — number of inspectors typically involved in a one‑month NBRB inspection. - 34 — total CoS staff. - 6 — number of companies offering life policies in insurance sector (as noted). - 36 — number of items in MoF "Rules for Auditing Activity". - 5 percent and 10 percent — thresholds referenced in ownership/control and fit-and-proper discussion (BC defines insiders as promoters holding more than five percent; fit-and-proper criteria applied for holdings of more than 10 percent). *Source: IMF assessment text as provided in the content unit.* ### 15. Compliance programs are not yet required of auditors, lawyers, dealers in ### _cr07190 - 15. Compliance programs are not yet required of auditors, lawyers, dealers in ### Regulation, supervision and monitoring (R.17, 24-25) - General framework - Only casinos and notaries are regulated specifically for AML/CFT purposes; however, each DNFBP is a regulated business or profession under Belarus law. - Specific statutes govern casinos, lawyers, notaries, auditors, real estate agents, and dealers in precious metal and stones. - A competent minister is designated to administer and enforce applicable regulation for each sector. - Decree of the President of the Republic of Belarus, No. 17, July 14, 2003, “on Licensing of Some Kinds of Activity,” lists Ministries responsible for licensing of various activities. - Functional licensing and regulation objectives vary by sector: professional qualifications and conduct (lawyers, notaries, accountants), financial integrity (casinos), or management of key resources (precious metals and stones). - A licensing regime applies to all DNFBP practitioners and almost all are subject to fit and proper evaluations. - Except for the regime for lawyers, all supervisors have established programs for on-site examination of regulated parties, with powers to sanction for noncompliance with law or regulation. - DNFBPs (except lawyers) are subject to regular examination by the tax authorities, and to targeted reviews by the SCC; inter-departmental arrangements allow for joint on-site examinations. - Self-regulatory arrangements exist for the law profession. Professional codes of conduct have been issued for lawyers and auditors but no guidance specifically addressing AML/CFT obligations has been issued for any DNFBPs. ### Casinos - Legal and supervisory instruments - At mission time, casino sector organized under Decree No. 548 of September 20, 1999; shortly after the mission Decree No. 548 was replaced by Decree No. 9 of January 10, 2005 “On Approval of the Regulation on Operating in the Gambling Business.” - Approximately 25 casinos operate around the country, none on a large scale and with most activity concentrated in Minsk. Card clubs do not exist. - MST is primary functional regulator; Decree provides that Agencies of the SCC, MIA, and tax agencies also effect control over gambling businesses within the limits of their competence. - A satisfactory background check with no negative information is an essential requirement for issuance of a license. - Each casino location is separately licensed; the license specifies types of gambling activities permitted and the number of tables to be operated. - Financial controls and reporting - Regulations require purchases of chips to be paid in cash and winnings to be redeemed in cash. - All payouts require presentation of proper documents confirming identity. - Winnings are not taxable, but casinos must report winnings of over 1,000 base units (approximately US$11,500) to the MTD, along with passport identification of the client. - Casinos are obliged to provide receipts for winnings if requested; authorities note such receipts are not accepted by the tax authorities as a record of the source of funds since they do not include amounts paid to buy chips. - It was unclear whether financial institutions would accept such receipts as documentation of a client’s source of funds. - Law enforcement reports cases of suspected ML typically involve conspiracy between casino employees and gamblers to falsely report winnings. - Supervision and sanctions - On-site inspections are carried out by supervisory agencies, sometimes jointly, with the SCC exercising primary oversight of gambling activities. - Casino operators report on-site inspections are thorough and spot checks are frequent. - MST, as licensing authority, can impose sanctions ranging from warnings, suspension of activities, or withdrawal of licenses. - Inspections focus on financial controls, tax compliance, reporting of winnings at or above the 1,000 base units threshold, and preventing criminal elements from involvement in casinos. - Authorities believe cash in-cash out requirement, coupled with reporting of winnings, mitigates ML risk without complicity of casino employees. ### Lawyers - Organization and oversight - Law profession organized under Law No. 2406-XII of June 15, 1993 “On the Legal Profession” last amended April 30, 2003, and various decrees and resolutions. - MoJ is competent body authorizing legal practice but governance is delegated to Bars, implemented by regional bar associations as self-regulatory organizations (SROs). - Minsk Bar reports regional Bars operate with a very high degree of autonomy from MoJ oversight. - Professional licenses are issued by the MoJ but examination for professional qualifications is effectively under the control of a Bar Qualification Committee comprised by members of the Bars. - Licensing is subject to background checks for fit and proper verification. Membership in a bar is required to provide legal advice. - The Bar sets the code of ethics and is responsible for qualification and oversight of members, including disciplining for violations. Disciplinary measures include: reprimand, pronunciation (sic), severe reprimand, and disbarment. - The Bar does not conduct proactive examinations of members but responds to violations as they become aware of them. ### Notaries - Legal and supervisory framework - Notary profession organized under Law No. 305-3 of July 18, 2004, “On the Notarial Office and the Notarial Activity” and various decrees and resolutions. - Article 48 of the Civil Code specifies procedures for carrying out the notary function. - MoJ is the competent ministry for regulation and oversight of the notary profession. - Notaries are subject to the AML Law. - The notary function is considered a public function; most notaries are public servants, although private notary practices also provide services. - Licenses granted by MoJ based on professional qualifications (university training in law plus work experience, and examination) and a background check for fit and proper. - Notaries are required to file reports on financial transactions subject to special controls, which includes financial operations with moveable and real property. - Inspections and advisory bodies - MoJ inspects notaries on an as-necessary basis. - Tax authorities carry out regular inspections, including reviewing reports of financial operations requiring special control. - A Council of Notaries composed of public notaries advises the MoJ but does not exercise oversight or disciplinary functions. ### Auditors - Legal status and licensing - Auditing profession organized under Law No. 3373-XII of November 8, 1994, “On Auditing Activities” and various decrees and resolutions, including a Code of Auditors adopted in 1998. - Auditors are not subject to AML/CFT preventive measures requirements. - MoJ is competent ministry for regulation and oversight of independent auditors, who are required to be licensed. (Accountants are not licensed.) - Special licenses are required to audit banks (issued by the NBRB) and insurance companies (issued by the MoF). - Licensing is oriented toward quality control and is based on education, experience and tests of professional qualifications, as well as background checks for fit and proper. Criminals are statutorily barred from being auditors. - Inspection and disciplinary regime - As of November 2004, there were 1,121 licensed auditors, with 81 auditing firms authorized and 484 individuals self employed. - MoF carries out documentary inspections of auditors' offices on a two-year cycle, emphasizing verification that audits were conducted according to prescribed norms. - On-site examinations review files, opinions, internal controls (including access to auditor work papers), and checks for compliance with applicable laws and regulations. - MoF may issue warnings, require time-limited corrective actions, and withdraw licenses. It has no authority to issue fines but may refer serious violations to a prosecutor. - Auditors are also subject to inspection by the MTD. ### Real Estate Agents - Regulatory revision - The structure for regulation and oversight of real estate agents is being revised on the basis of Resolution of the Council of Ministries of the Republic of Belarus, No. 1409, November 6, 2004; “On” (text truncated). - (Source text ends at this point for real estate agent coverage.) *Source: _cr07190 - 15. Compliance programs are not yet required of auditors, lawyers, dealers in* ### introduction of amendments to the regulation on licensing of legal advice services” [Real Estate Agents]. This ### _cr07190 - introduction of amendments to the regulation on licensing of legal advice services” [Real Estate Agents]. This ### Real estate agents — licensing and regulatory changes - Resolution makes the MoJ the competent authority for real estate agents (in place of the Ministry of the Economy). - Licensing of agents, which was suspended in 2003, will be reintroduced as of February 2005 based on the premise that real estate agents effectively provide legal advice. - Licensing requirement will apply to legal entities; individual agents will only be subject to registration. - Licensing will require applicants to meet satisfactory professional qualifications, including university education in law, economy, or construction, as well as background checks for fit and proper. ### Dealers in precious metals and stones - Market governed primarily by Law No. 110-Z of June 21, 2002, “on Precious Metals and Gemstones” administered by the MoF. - Law covers industrial trades and licensing of retail transactions. - NBRB engages in limited trading in gold bullion (apparently mainly to meet industrial requirements of the MoF). - Under the BC, banks may be licensed by the NBRB to deal in precious metals and stones; beginning in 2003, one bank has been so licensed but has done little business. - Bank gold bullion dealing is subject to NBRB AML regulations and supervision. - Belarus has a small and declining diamond cutting business consisting of one state-owned company and one joint stock company; uncut diamonds imported primarily from Russia and cut stones exported primarily to the wholesale market in Antwerp. - Imports and exports of diamonds are subject to the full documentation procedures required under the Kimberly Process, which Belarus joined in 2003; a Kimberly certification review is to be undertaken within a few months and preliminary reviews have not cited any shortcomings. - MoF is the monopoly supplier of precious metals used for industrial purposes; maintains stocks and exercises strict controls over purchases, sales, usage, import, exports and reprocessing and has a monopoly on testing and assaying. - About 100 entities have been licensed by the MoF to engage in transactions with precious metals and stones, including 17 industrial users, plus licenses for jewelry production, jewelry wholesalers and retailers, pawn brokers, and dentists. - Regulatory provisions aim to control fraud, theft, and ML. Strict provisions apply to diamond cutting and industrial metals; other usages appear limited with less intensive supervisory oversight. - Dealers in precious metals and stones are not subject to the current AML law. ### Summary analysis — DNFBPs (designated non-financial businesses and professions) - Belarus has a well-structured statutory regime of regulation for all DNFBPs but the regime does not, for the most part, focus directly on AML/CFT preventive measures since only casinos and notaries are subject to the AML Law. - Functional regulators: - Have been appointed. - Licensing subject to fit and proper requirements is mandatory. - Off-site monitoring and on-site examination are the norm. - Share inspection authority with other regulators with specialized competencies (MTD, SCC, and the MIA). - Have powers to sanction licensed entities: warnings, reprimands, requirements to take corrective actions and withdrawal of licenses. - Do not have authority to issue fines; serious issues may be referred to prosecutors. - No information provided on frequency of enforcement actions. - Ministries are adequately staffed and trained to exercise effective oversight; DNFBPs generally comment that detailed inspections are the norm. - Notaries (largely public officials): inspections discretionary rather than routine. - The Bar has authority to examine lawyers’ activities but exercises it in response to issues rather than routinely. Recommendations and comments (DNFBPs) - Lawyers, auditors, real estate agents, and dealers in precious metals and stones should be subject to the preventive measures requirements of the AML Law. - Regulations should establish clear responsibility for monitoring and enforcing compliance with AML obligations, either by the functional regulator, or by the FMD, or jointly. - Stronger enforcement sanctions should be adopted, including the authority to assess administrative fines. - Training should be provided to both regulators and regulated parties to raise knowledge and awareness of AML obligations. - The AML obligations of lawyers, and the role of the Bar in supervising these arrangements, should be clarified. To avoid doubt about reporting obligations, the lawyers’ Code of Ethics and the Rules for Auditors could be amended to explicitly prohibit lawyers and auditors from engaging in financial transactions for or on behalf of clients, thereby codifying current interpretation and practice. - Article 186 of the CC should be amended to criminalize failure to report ML. Compliance with FATF Recommendations (DNFBPs) - R.17 — Compliant: Competent authorities with adequate enforcement powers exist for all DNFBPs even though AML/CFT preventive measures obligations have not been extended to all relevant sectors. - R.24 — Noncompliant: Supervisory arrangements for lawyers, auditors, real estate agents and dealers in precious metals and stones do not extend to monitoring and ensuring compliance with AML/CFT requirements. - R.25 — Noncompliant: Guidelines have not been established to assist DNFBPs to implement and comply with AML/CFT requirements. ### Other nonfinancial businesses and professions — modern secure transaction techniques (R.20) Description and analysis - Other than DNFBPs, other nonfinancial businesses and professions do not appear to carry on significant activities in Belarus. - Mission did not see evidence that authorities had systematically considered whether other activities (e.g., high value dealers) may present significant ML/TF risk. - For legal entities all significant payments are required to be executed by means of bank transfers. For individuals cash is the preferred means of payment. - Real estate transactions between legal entities required to be settled by bank transfers; no similar requirement exists for real estate transactions between individuals. - Market participants report real estate transactions between individuals are typically settled in cash, including in foreign exchange, with weak arrangements for verifying amounts exchanged. - Authorities note that settlements in foreign exchange cash between individuals, including real estate settlements, are prohibited by the Belarus Law “On Foreign Exchange Regulation and Foreign Exchange Controls.” Recommendation and comment - Real estate transactions between individuals should be required to be settled by means of bank transfers or check. Compliance with FATF Recommendations - R.20 — Noncompliant: No evidence that authorities have systematically considered AML/CFT risks of nonfinancial businesses. Cash settlement of individual real estate transactions stands out as an exception in a regime which imposes tight controls and monitoring of most financial transactions. ### Legal persons and arrangements — beneficial ownership, and nonprofit organizations Legal Persons — Access to beneficial ownership and control information (R.33) - Belarus operates a centralized company registration system that includes details of ownership and control of each company. - It was not clear to the mission that information maintained, particularly for foreign-owned companies, could be relied upon to identify the current ultimate beneficial owner in all cases. - Financial operations of companies are subject to tight controls, including a restriction that each company must maintain only one bank account for clearing and settlement purposes. - Authorities concerned at large incidence of ‘overnight’ companies that, although registered legitimately, engage in unauthorized activities without licenses or falsify records to evade taxes and duties; these companies typically cease trading just before their first tax return is due or when identified by authorities. - Authorities have taken steps to identify and eliminate such companies at registration stage and indicate success. - Company ownership information is available to financial institutions, and it is mandatory for them to check supporting documentation for company ownership and legal validity of requested transactions before processing them. - It was not clear that financial institutions always verify ultimate beneficial ownership beyond the domestic level in cases of foreign-owned companies. Recommendation and comment - Measures should be taken to ensure the completeness and accuracy of company registration information, to include verified beneficial ownership details, including for nonresident shareholders. Compliance with FATF Recommendations - R.33 — Partially compliant: Incomplete information available on beneficial ownership of companies. Legal Arrangements — Access to beneficial ownership and control information (R.34) - Mission informed that legal arrangements, other than legal persons discussed under R.33, do not exist in Belarus. - Problems encountered in obtaining access to beneficial ownership/control information on arrangements originating in other countries when such entities seek to conduct financial transactions in or through Belarus. Compliance with FATF Recommendations - R.34 — Not applicable: Such legal arrangements do not exist in Belarus. Nonprofit organizations (SR.VIII) - Activities of NPOs monitored under laws that regulate financial control and auditing within competence of law enforcement and special monitoring agencies. - Department of Humanitarian Activities of the President’s Administration (DHA) in charge of government policy concerning humanitarian work. - NPOs required to be organized as legal entities; pursuant to the Law “On accounting”, all legal entities required to keep financial records. - Foreign and domestic NPOs active at the national level required to be registered with the MoJ; all other NPOs registered at local or regional level. - Presidential Decrees No. 24 of November 28, 2003 and No. 537 of November 28, 2003 provide mechanisms to monitor receipt and special-purpose use of foreign nonreimbursable assistance. - Presidential Decree No. 24 requires charitable organizations to apply to the Presidential Administration for approval of donors and for tax/duty exemption; applications to be accompanied by bank statement and plan indicating intended use. - Access to funds received as foreign nonreimbursable assistance requires submission each time a transfer is received of copy of assistance agreement and schedule indicating intended use to DHA and the bank; without DHA authorization organization would not have access to transferred funds. - Presidential Decree No. 537 assigns supervision of special-purpose foreign nonreimbursable assistance to SCC, MIA, MTD, SSC, Customs, DHA, among others. - Charitable organizations and beneficiaries examined once a year by tax authorities and DHA, and twice a year by the SCC. - Foreign NPOs providing assistance for prohibited purposes under Decree No. 24 may be required to cease activities in Belarus. - Beneficiary organizations that do not use foreign assistance for intended purpose liable to fines of up to 100 percent of the value of the assistance received or to confiscation of goods and property received. - Oversight appears comprehensive; measures in place appear adequate to prevent terrorist organizations from pretending to be legitimate NPOs. - Most foreign nonreimbursable assistance received consists of goods rather than money. No plans to amend existing legislation concerning NPOs. - LEAs have not detected specific cases of fund-raising by NPOs in Belarus for financing terrorist activities. Compliance with FATF Recommendations - SR.VIII — Compliant ### National cooperation and coordination (R.31) - Article 9 of the AML Law: State Secretariat of the Security Council coordinates activities of government agencies working on AML measures. President is head of the Council, which appoints director of the DFM. - Council or its secretariat does not take role in day-to-day operations of the FIU. - Cooperation between supervisory agencies not formalized or regular, except joint on-site inspections coordinated by the SCC. - No formal coordination committee dealing with operational AML/CFT issues; ad hoc working groups formed successfully (e.g., to assist redrafting AML Law and for purposes of assessment). - Some overlapping in functions of bodies responsible for economic crime and ML; scope of responsibilities not clearly defined. - Cooperation and information-sharing on terrorism-related offenses undertaken by Council of Security, Anti-Terrorist Centre and Interdepartmental Counter-Terrorism Commission, connected to the SSC. - Very little indication of coordination towards development of AML/CFT measures for DNFBPs. Recommendation and comment - Supplement current interdepartmental agreements with an AML/CFT coordinating committee to advise on development and implementation of new measures, including for DNFBPs. Compliance with FATF Recommendations - R.31 — Partially compliant: Mechanism to improve coordination between agencies responsible for investigating ML is needed. ### The Conventions and UN Special Resolutions (R.35 & SR.I) - Belarus ratified: - Vienna Convention on July 28, 1990; - Palermo Convention on June 25, 2003; - FT Convention was ratified on May 2004. - Conventions largely implemented. - ML offence under Art. 235 of the CC does not follow the international standards set forth by Vienna and Palermo Conventions; Art. 235 does not explicitly establish all required offences relating to ML and appears limited to (i) intentional concealment or disguise of illicit proceeds, and (ii) intentional acquisition, possession or use of illicit proceeds, but does not clearly criminalize intentional conversion or transfer of illegal proceeds. - FT not criminalized as a separate offence under current legislation, but CC adequately covers material elements of FT set forth under Article 2, paragraph 1 of the FT Convention. FT treated as an act of complicity carrying same penalty as main terrorism offense and applicable even if financed terrorist acts have not been attempted or committed. - Belarus has taken measures to implement UNSCRs 1267, 1269, 1333 and 1390. UNSCR 1373 implemented through CT Law, Resolution No. 10 of the Board of Directors of the NBRB of 28 January 2002, adopted under Art. 3 of the BC and other coordination measures. - Resolution No. 10 instructs banks to suspend transactions in respect of accounts belonging to natural persons or entities with links to terrorist organizations as per lists transmitted by the UNSC. - Under the CC, intentional provision of funds in support of terrorism by Belarusian citizens or other persons in its territory constitutes participation in the terrorist act itself as complicity or aiding and abetting. - CT Law states knowingly financing or otherwise assisting a terrorist organization or group constitutes terrorist activity. - LEAs and special security services participate with CIS countries’ corresponding services in an early warning system intended to prevent terrorist acts. - Art. 4 of the CT Law states Belarus will cooperate on counter-terrorism under international treaties and with international organizations engaged in counter-terrorism. - Pursuant to Art. 15 of the Law “On international treaties of the Republic of Belarus”, provisions in international treaties can be directly applied except where enabling domestic legislation is required. - Implementation of freezing orders and evidence gathering under UNSCR 1373 may be difficult under current legislation; not tested in practice. - Belarus has not identified assets belonging to individuals or entities on the UN 1267 Sanctions Committee’s consolidated list. - Authorities encouraged to adopt domestic acts to enable full compliance with UNSCRs 1267 and 1373. - Belarus is a party to the 12 UN counter-terrorism agreements and to the Agreement on Cooperation among Ministries of Internal Affairs of CIS Member States in the Fight against Terrorism. - Interdepartmental Counter-Terrorism Commission convened by the President coordinates counter-terrorism activities. - Presidential Decree on asylum procedure amendments is being drafted to establish grounds for refusing asylum for individuals who committed certain crimes abroad. Recommendations and comments - Article 235 does not explicitly establish all required offences relating to the ML offence, in accordance with the Vienna and Palermo Conventions. - Review legislation to determine need for amendments necessary for full implementation of UNSCRs. - Review FT Convention to determine which provisions require enabling legislation and amend legislation as needed. Compliance with FATF Recommendations - R.35 — Largely compliant: Vienna and Palermo Conventions not fully implemented regarding criminalization of ML. - SR.I — Compliant ### Mutual Legal Assistance (R.32, 36-38, SR.V) - Article 2 of Law No. 284-3 of May 18, 2004 “On international legal assistance on criminal proceedings” (ILA Law): legal assistance upon foreign requests may be rendered on basis of treaties or on reciprocity in absence of a treaty. - Article 3 of the ILA Law: legal assistance will not be rendered on basis of reciprocity where assistance is against interests of Belarus or breaches Belarusian law. - PGO and Supreme Court authorized to adopt decisions on providing legal assistance in absence of a treaty, based on reciprocity; Article 7 allows communication via diplomatic channels or directly in urgent cases. - Article 4 of ILA Law: legal assistance under reciprocity includes service of documents, implementation of pleadings, transfer of material evidence, temporary transfer of persons pending extradition decisions, temporary transfer of persons under arrest or serving sentence to implement pleadings with their participation, search for persons suspected/charged/convicted, extradition, criminal prosecution, execution of court decisions, and execution of any other action. - Article 4: possible to trace, identify, seize and confiscate proceeds of crime and assets used for or intended to be used for FT, and instrumentalities for such offences, at request of another country. - Authorities stated legal assistance is provided within one or two weeks of receiving the request; mission unable to verify due to lack of statistical information. - Belarus does not make MLA conditional on dual criminality; grounds for refusal not explicitly listed in ILA Law but indicated in bilateral treaties. Authorities specified taxation issues or financial secrecy would not be sufficient grounds for refusal in absence of a treaty, provided confirmation of reciprocity. - Cooperation with foreign LEAs on terrorism based on bilateral international agreements with multiple countries and CIS agreements. - Coordination of seizure and confiscation actions within CIS established in MLA agreements; Interpol channel used for other countries. - Belarus legislation does not generally authorize sharing of confiscated assets with other countries; sharing can be agreed in a treaty. - Belarus has MLA Agreements in force within the CIS and with Lithuania, China, Latvia, Finland, Poland and Vietnam; agreement with Russia on cooperation and mutual assistance in combating illegal financial operations since 1999; discussions under way with Czech Republic, Slovakia, Sweden, Iran and India. - Authorities execute timely and effective follow-up to MLA requests per mission, but effectiveness could not be verified as centralized statistics are not kept on MLA requests or outcomes. - Absence of readily available MLA data prevents review of effectiveness of international cooperation framework. - Mission recommended maintaining statistics including details on nature and results of MLA requests and adopt procedures to handle MLA requests without undue delay. - Draft law on international legal assistance in criminal matters introduced on August 6, 2002; enactment should not be delayed. Recommendations and comments - Establish centralized annual statistics on MLA requests received or made, relating to ML and FT, the predicate offences, including nature of the request, its result and the time of response. - Enact as soon as possible draft law on international legal assistance in criminal matters. - Adopt administrative procedures to prevent MLA requests from being unduly delayed. - Enact draft law on international cooperation in legal assistance in criminal matters, to regulate provision of legal assistance in absence of a treaty. - Adopt administrative procedures to provide timely response to MLA requests from nonCIS countries related to provisional measures and confiscation. Compliance with FATF Recommendations - R.32 — Noncompliant: Absence of annual statistics on MLA. - R.36 — Largely compliant: Absence of clear processes for timely execution of MLA. - R.37 — Largely compliant: Lack of procedures to ensure prompt MLA in the absence of international agreements. - R.38 — Compliant - SR.V — Largely compliant: Absence of clear processes for timely execution of MLA. ### Extradition (R.32, 37 & 39, & SR.V) - Article 7 of the CC: foreign nationals and stateless persons may be extradited to a foreign country to face criminal charges or serve a sentence on basis of treaties; in absence of a treaty, extradition on basis of reciprocity unless against interests of Belarus or breaches Belarusian law. - All crimes are extraditable offenses under the CC, including ML and FT-related offences. - Belarus does not consider terrorist acts to be political offenses for which extradition can be refused. - Belarus does not have a separate extradition law; ILA Law is silent on measures/procedures applicable to extradition requests. - No specific procedures in place to allow extradition requests to be handled without undue delay. - Article 7.1: Belarusian nationals may not be extradited except as provided by international treaties to which Belarus is a party; consistent with Article 10.2 of the Constitution. - In practice, Belarusian nationals would not be extradited since treaties containing such a provision unlikely to be signed by Belarus. Under Article 6 of the CC, Belarusian nationals whose extradition is refused may be prosecuted for offenses committed abroad. - No provisions in CC or ILA Law make acceptance of an extradition request subject to dual criminality; extradition treaties include provisions that persons are extradited for acts criminalized under the legislation of the parties and penalized with at least one year of imprisonment. - It is unclear if extradition would be subject to dual criminality in absence of a treaty; authorities stated Belarus generally does not condition extradition to dual criminality when dealing on basis of reciprocity. - No statistics available to mission on number of extradition requests received, proportion granted, or average processing time. - Authorities working on a draft law “On the ...” (text truncated in source). Compliance notes (as applicable to extradition-related FATF Recommendations) - Relevant compliance issues reflect absence of specific procedural rules, absence of statistics, and lack of a separate extradition law as described above. *Italic: IMF report content from _cr07190 - introduction of amendments to the regulation on licensing of legal advice services” [Real Estate Agents]. This* ### introduction of amendments and supplements to the Criminal-Procedural Code of the Republic of Belarus related ### introduction of amendments and supplements to the Criminal-Procedural Code of the Republic of Belarus related to issues of rendering international legal assistance on criminal proceedings ### Extradition: proposed amendments and procedural gaps - Proposed new Article 491 of the CC would explicitly establish the dual criminality requirement. - The proposed provision refers to the conduct underlying the offence, rather than to the offense itself, thereby averting impediments to the extradition request due to differences in the criminalization of the offense between the two countries. - Recommendation: the amendment to the CC concerning extradition should be complemented with procedures that would ensure that extradition requests are handled without undue delay and provide for alternative simplified procedures for extradition on a case-by-case basis. - Belarus has signed bilateral treaties and conventions on extradition with the FSU countries, in addition to Poland, China and Vietnam. An extradition treaty with Italy is under discussion. Recommendations and comments (extradition) - Establish centralized annual statistics on extradition requests that are received or made, relating to ML and FT, the predicate offences, including the nature of the request, its result and the time of response. - Finalize and enact draft law “On the introduction of amendments and supplements to the Criminal Procedure Code of the Republic of Belarus related to issues of rendering international legal assistance on criminal proceedings”. - Establish administrative procedures to ensure that extradition requests are not unduly delayed and provide for alternative simplified procedures for extradition on a case-by-case basis. - Establish procedures for the timely execution of extradition requests concerning FT. Compliance with FATF Recommendations (selected) - R.32 — Noncompliant — Absence of statistics on extradition. - R.37 — Largely compliant — Unclear if, in the absence of a treaty, extradition would be conditional on dual criminality. - R.39 — Largely compliant — Absence of clear procedures to ensure timely handling of extradition requests. - SR.V — Largely compliant — Absence of clear procedures to ensure timely handling of extradition requests. ### Other forms of international co-operation (R.32 & 40, & SR.V) Description and analysis - In accordance with Article 9 of the AML Law and Article 4 of the CT Law, Belarus shall cooperate in the area of AML/CFT with foreign states, their law enforcement agencies and special services, on the basis of international agreements of which Belarus is a party, or the principle of reciprocity or other principles of international law. - All law enforcement authorities are authorized to share information spontaneously with their foreign counterparts in relation to ML and predicate offences, subject to reciprocal treatment and within the limits established in the legislation. - The performance of inquiries on behalf of foreign counterparts is also authorized. - In the wider context of banking supervision, the NBRB has agreements on cooperation with Russia, Kazakhstan, Armenia, Lithuania, Latvia, Moldova, Ukraine, Kyrgyz Republic, and Cyprus. - Cooperation against terrorism is based on several bilateral agreements and Belarus joined the Agreement for Cooperation in Combating Terrorism among MIAs of Ukraine, Turkmenistan, Moldova, Armenia, Georgia, Kazakhstan, Tajikistan, Kyrgyzstan, Russia, Uzbekistan and Azerbaijan. Forms of cooperation under the Agreement for Cooperation in Combating Terrorism - Exchange of information on planned terrorist acts in CIS States and on terrorist and other extremist organizations and groups; - Response to inquiries regarding operational and investigative measures aimed at preventing, detecting, suppressing and investigating terrorism-related crimes; - Development and implementation of coordinated measures aimed at suppressing the activities of terrorist groups and organizations, among other things, by cutting off their financial and other kinds of support. Additional cooperation arrangements - MIA concluded bilateral interdepartmental agreements on cooperation with the MIAs of the abovementioned countries. - Cooperation with the United Kingdom, Turkey, Bulgaria, Romania, Poland, Lithuania, Vietnam and China exists regarding organized crime and international terrorism. - The Interpol National Central Bureau at the PGO has access to the Interpol General Secretariat’s computer database on terrorism. - The MTD issued a resolution in coordination with the SCC on the basis of Presidential Decree 173 to provide for a feedback arrangement between the MTD and the FID. Recommendations and comments (international cooperation) - Relevant recommendations already included under other sections. Compliance with FATF Recommendations (selected) - R.32 — Noncompliant — Centralized, comprehensive statistics needed. - R.40 — Compliant - SR.V — Largely compliant — Absence of clear processes for the timely execution of MLAs in CFT. ### Ratings of compliance with FATF Recommendations (summary) - The assessment uses the 2004 Methodology levels: Compliant (C), Largely Compliant (LC), Partially Compliant (PC), NonCompliant (NC), and, in exceptional cases, not applicable (na). Selected ratings and underlying factors (excerpt) - 1. ML offence — Partially compliant — Incrimination of ML not fully consistent with Vienna and Palermo conventions. Current framework hinders the prosecution of ML offenses. - 2. ML offence–mental element and corporate liability — Largely compliant — Not clear if intentional element of ML offenses can be inferred from objective factual circumstances. Legal entities not criminally liable for ML. - 3. Confiscation and provisional measures — Partially compliant — Confiscation of funds or other assets related to FT not provided in the legislation. The rights of bona fide third parties are not expressly provided for in the legislation. - 4. Secrecy laws consistent with the Recommendations — Compliant - 5. Customer due diligence — Partially compliant — Most criteria are addressed in recommendations which are accepted as mandatory and implemented in practice but do not have express force of law as required in certain cases by the FATF Recommendations. Some elements have yet to be introduced (e.g., for beneficial owners). Implementation was observed in practice with most of the key CDD measures. Insurance and Securities: No specific CDD requirements are yet set out for these sectors. - 6. Politically exposed persons — Non-compliant — There are no requirements in place for PEPs. - 7. Correspondent banking — Partially compliant — Requirements for assessing correspondents are in place but do not fully meet the FATF standard on management approval, documentation, and customer access. - 8. New technologies & non face-to-face business — Non-compliant — AML/CFT requirements have not been issued for risks from internet or other electronic banking. - 9. Third parties and introducers — Not applicable — There is no provision for financial institutions to rely on intermediaries. - 10. Record keeping — Non-compliant — The mission could not establish that the Belarus record-retention requirements met the provisions of Recommendation 10. - 11. Unusual transactions — Partially compliant — Strong measures in place but provisions do not correspond directly with the wording of Recommendation 11. - 12. DNFBP–R.5, 6, 8-11 — Non-compliant — Mandatory due diligence requirements, where applied, are not as extensive as required by the FATF recommendations. - 13. Suspicious transaction reporting — Non-compliant — Current provisions could not be considered a requirement to report all transactions, without a minimum threshold, to an FIU where an entity suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity. - 14. Protection & no tipping-off — Partially compliant — There is a “no tipping off” provision, but it lacks precision. - 15. Internal controls, compliance & audit — Partially compliant — Mission could not verify direct implementation; not all are expressly included in NBRB recommendations; no equivalent requirements for insurance or securities. - 16. DNFBP–R.13-15 & 21 — Non-compliant — Compliance programs not required for lawyers, auditors, dealers in precious metals and stones, and real estate agents. - 17. Sanctions — Partially compliant — Sanctions cannot be applied by the NBRB for a breach of its current AML/CFT recommendations. - 18. Shell banks — Largely compliant — No explicit requirement for physical presence. - 19. Other forms of reporting — Largely compliant — Bearer instruments do not appear to be addressed. - 20. Other NFBP & secure transaction techniques — Non-compliant — No evidence that authorities have systematically considered AML/CFT risks of nonfinancial businesses. - 21. Special attention for higher risk countries — Partially compliant — Recommendation 21 is not explicitly implemented, but substantial relevant measures have been taken. - 22. Foreign branches & subsidiaries — Not applicable — Belarus financial institutions do not have subsidiaries or branches abroad. - 23. Regulation, supervision and monitoring — Partially compliant — Supervision appears effective but does not cover all aspects of the FATF 40+9. Extend fit and proper test, including to insurance. Securities supervision does not yet address AML/CFT. - 24. DNFBP - regulation, supervision and monitoring — Non-compliant — Supervisory arrangements for lawyers, auditors, real estate agents and dealers in precious metals and stones do not extend to monitoring and ensuring compliance with AML/CFT requirements. - 25. Guidelines & Feedback — Partially compliant — FIU has yet to issue guidelines and establish a formal system of feedback. - 26. The FIU — Non-compliant — DFM is not a single, centralized FIU and is only able to receive disclosures on transactions in foreign currency. DFM has not issued comprehensive guidance regarding compliance with their duties in the AML Law. - 27. Law enforcement authorities — Compliant - 28. Powers of competent authorities — Compliant - 29. Supervisors — Partially compliant — AML/CFT not addressed as part of onsite inspection work for insurance and securities. - 30. Resources, integrity and training — Non-compliant — Mechanism to improve coordination between agencies responsible for investigating ML is needed. Assure independence of decision making of the NBRB, and provide additional resources in particular to permit the CoS to implement at least basic AML/CFT measures. - 31. National cooperation — Partially compliant — No overall structure for operational cooperation. - 32. Statistics — Non-compliant — Absence of annual statistics on MLA and extradition. Centralized, comprehensive statistics needed. - 33. Legal persons–beneficial owners — Partially compliant — Incomplete information available on beneficial ownership of companies. - 34. Legal arrangements – beneficial owners — Not applicable — Such legal arrangements do not exist in Belarus. - 35. Conventions — Largely compliant — Vienna and Palermo Conventions not fully implemented regarding criminalization of ML. - 36. Mutual legal assistance (MLA) — Largely compliant — Absence of clear processes for the timely execution of MLA. - 37. Dual criminality — Largely compliant — Lack of procedures to ensure prompt MLA in the absence of international agreements. Unclear if, in the absence of a treaty, extradition would be conditional on dual criminality. - 38. MLA on confiscation and freezing — Compliant - 39. Extradition — Largely compliant — Absence of clear procedures to ensure timely handling of extradition requests. - 40. Other forms of co-operation — Compliant Nine Special Recommendations (selected) - SR.I Implement UN instruments — Compliant - SR.II Criminalize terrorist financing — Non-compliant — FT is not criminalized as a distinct and separate offense from terrorism. - SR.III Freeze and confiscate terrorist assets — Non-compliant — No legislation regarding prompt freezing of terrorist property. - SR.IV Suspicious transaction reporting — Non-compliant — There is no requirement to report all transactions suspected to be related to terrorism, and the draft FT Law has yet to be enacted. - SR.V International cooperation — Largely compliant — Absence of clear processes for the timely execution of MLA and extradition requests, including in CFT cases. - SR.VI AML requirements for money/value transfer services — Compliant - SR.VII Wire transfer rules — Non-compliant — No specific AML/CFT legal requirements were identified for outbound wire transfers, and those for incoming transfers fall short of the provisions of SR.VII. - SR.VIII Nonprofit organizations — Compliant - SR.IX Cash Couriers — Non-compliant — Measures in place not applicable to bearer negotiable instruments. ### Table 3: Recommended Action Plan (selected high-priority actions) Criminalization of Money Laundering (R.1 & 2) - Amend Article 235 of CC to reduce exceedingly high burden of proof as to the mens rea on prosecutors for prosecuting ML. - Amended Article 235 should clearly criminalize all the types of ML offenses as required by the Vienna and Palermo Conventions. - Remove Remark 1 from Article 235 to allow prosecution for “self-laundering”. - Remove Remark 2 from Article 235 to eliminate potential hindrance to combat ML. - Criminalize insider trading and market manipulation in the CC, in order for the ML offense to cover all categories of predicate offences. - Establish in legislation that the intentional element of ML offenses may be inferred from objective factual circumstances. - Establish criminal liability of legal entities for ML or, if this is not possible due to fundamental principles of Belarus law, establish civil or administrative liability. Criminalization of Terrorist Financing (SR.II) - Criminalize FT as a separate and autonomous offense from terrorist acts. - Introduce new provisions in legislation to make available preventive measures against FT. - Amend Article 285 of the CC to establish liability for recruitment (payment) of a person to be a member of a terrorist organization or for participation in the commission of a terrorist act. Confiscation, freezing and seizing of proceeds of crime (R.3) - Amend Article 235 of CC to make confiscation an obligatory sanction upon conviction for ML or FT. - Make property of legal entities subject to confiscation upon conviction for ML or FT. - Extend powers to execute provisional measures in the OCC Law to investigations related to all crimes, including ML and FT. - Based on the provision in Article 11 of the OCC Law, amend CC to make all acts, contractual or otherwise, carried out for ML purposes invalid. - Establish provisions regarding the freezing, seizure and confiscation of funds or other assets related to FT. Freezing of funds used for terrorist financing (SR.III) - Establish specific legal requirement to freeze terrorist assets without delay and without prior notice to persons designated in UNSC and national lists. There must also be procedures to allow the unfreezing of the assets of persons inadvertently affected by a freezing order. - Establish respective duties and powers of the SCC, the DFM, MIA and PGO, as regards the freezing of suspected terrorist assets. - Provide the DFM with the authority to order the freezing of funds and other property where there are grounds to suspect they are intended to be used for committing an act of terrorism. The Financial Intelligence Unit and its functions (R.26, 30 & 32) - Enact draft AML Law to provide DFM with the framework needed to perform FIU functions effectively. - Expedite implementation of steps needed to gain admission to the Egmont Group. - Consolidate the authority of the DFM as the single, centralized FIU for Belarus. - Provide for electronic submission of STRs. - Improve safeguard of sensitive information received by the DFM. - Provide adequate funding, staffing and the necessary resources for an enhanced electronic database for analysis to DFM. - DFM should maintain statistics on all STRs, not only those relating to transactions in foreign currency. Law enforcement, prosecution and other competent authorities (R.27, 28, 30 & 32) - Establish mechanism to improve the coordination between agencies responsible for investigating ML offences. - Provide training for judges and prosecutors on ML, FT and seizure, freezing and confiscation of proceeds of crime or property to be used to finance terrorism. - Compile and maintain relevant statistics. Cash couriers (SR IX) - Provide AML/CFT training to customs officers. - Acquire necessary equipment to run centralized database to facilitate the analysis of the cash movement customs declarations. - Extend requirements and powers to include bearer negotiable instruments. - Reassess effectiveness and enhance border controls over movements of cash and negotiable instruments, particularly in the case of the Russian border. *Source: introduction of amendments and supplements to the Criminal-Procedural Code of the Republic of Belarus related to issues of rendering international legal assistance on criminal proceedings* ### 3. Preventive Measures–Financial ### 3. Preventive Measures–Financial Institutions ### Customer due diligence, including enhanced or reduced measures (R.5 to 8) - For avoidance of any doubt, explicitly prohibit anonymous accounts and those in fictitious names; remove from BC and AML Law the provisions for bearer accounts. - Specify in the AML Law a clear basic requirement for customer identification, and outline the type of documentation required. - Develop in the AML Law the requirement for CDD, specifying when it must be carried out, in line with FATF Recommendation 5. - Provide in the AML Law that beneficial owners (including the ultimate beneficial owner) must be properly identified, and ensure that financial institutions establish when a customer is acting on behalf of another person. - Include in the AML Law a specific requirement for ongoing due diligence, and not just on financial operations currently subject to special controls. - Consider introducing a requirement that a financial institution declining or terminating a business relationship where it is unable to comply with CDD measures should file a STR. - Update and extend the current NBRB “recommendations”, reconstitute them as “regulations” or equivalent status, and provide unequivocally that they are binding, enforceable, and sanctionable, at least where indicated by FATF Recommendation 5. - Require CDD measures to be applied to the existing customer base, on the basis of materiality and risk. - Introduce a requirement for enhanced due diligence for foreign PEPs as set out in FATF Recommendation 6. Consider introducing equivalent measures for domestic PEPs. - Provide more detailed requirements for correspondent relationships, to include management approval, documented responsibilities, and identification controls on customer account access. - Introduce requirements for risk management of non-face-to-face business, including business done by internet or other electronic means. ### Third parties and introduced business (R.9) - Keep under regulatory review the scope for persons to conduct transactions or behalf of another, and introduce specific CDD requirements if warranted. ### Financial institution secrecy or confidentiality (R.4) - (No specific bullet items provided in source text beyond heading.) ### Record keeping and wire transfer rules (R.10 & SR.VII) - Revise the AML Law to provide unequivocally that all records of customer identification and transactions on accounts, in both domestic and foreign currency, should be retained for a period of time no less than five years (to accord with the minimum requirements of FATF Recommendation 10), in such manner that they can be produced for the appropriate authorities without delay. - Introduce specific requirements for all wire transfers to obtain and retain originator information in line with SR.VII. ### Monitoring of transactions and relationships (R.11 & 21) - Introduce a specific requirement for special attention for all complex or unusual transactions, with no apparent economic or lawful purpose. - Provide for special attention for dealings with countries that do not fully apply the FATF Recommendations. ### Suspicious transaction reports and other reporting (R.13-14, 19, 25 & SR.IV) - Amend the current reporting requirement to include the reporting without delay to the DFM of all suspicious transactions, regardless of size or currency. - Provide that STR filing is necessary in case of suspicion of ML or FT. - Amend the law to provide a clearer prohibition on tipping off. - Extend the current legal protections for those reporting to the FIU to cover all such reporting, even if below a threshold. - Issue comprehensive AML/CFT guidance to all reporting entities, and update that already in issue for banks. - Enact an FT Law. ### Internal controls, compliance, audit and foreign branches (R.15 & 22) - Update the NBRB Recommendations on AML/CFT, consider giving them a clear legal basis, and extend them to cover all aspects of FATF Recommendation 15 (e.g., that compliance officer should be at management level). - Issue AML/CFT guidance for the insurance and securities sectors. - Require additional and formalized employee training programs in reporting institutions. ### Shell banks (R.18) - For avoidance of doubt, consider adding a provision to the BC specifically requiring a physical presence and control and management of each bank to be located within Belarus. ### The supervisory and oversight system–competent authorities and SROs (R. 17, 23, 29 & 30) - Update on-site and off-site supervisory practices to include all relevant aspects of the FATF Recommendations. - Clarify the role of the CoS in implementing and supervising proportionate AML/CFT measures for the securities sector. ### Financial institutions─market entry and ownership/control (R.23) - Apply fit-and-proper tests to owners (including ultimate beneficial owners) and controllers of financial institutions. - Reassess the current 10 percent threshold provision and ensure that its application does not facilitate criminals or their associates in acquiring a significant or controlling interest in a financial institution. ### AML/CFT Guidelines (R.25) - Update the NBRB Recommendations on AML/CFT, consider giving them a clear legal basis. - Issue AML/CFT guidance for the insurance and securities sectors. - Ensure that detailed guidance is included on identifying and reporting suspicious transactions. ### Ongoing supervision and monitoring (R.23, 29 & 32) - Update on-site and off-site supervisory practices to include all relevant aspects of the FATF Recommendations. - Clarify the role of the CoS in implementing and supervising proportionate AML/CFT measures for the securities sector. - Introduce measures to capture and analyze comprehensive statistics as an aid to ongoing monitoring of the effectiveness of the AML/CFT system. ### Money value transfer services (SR.VI) - (Heading present; no specific bullet items provided in source text.) *Source: _cr07190 - 3. Preventive Measures–Financial Institutions* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2007/_cr07190.pdf_