U.S. Policy and Issues

Money Laundering Country Report - Belarus

Belarus is not a regional financial center. A general lack of transparency in industry and banking sectors makes it difficult to assess the level of or potential for money laundering and other financial crimes. Belarus faces problems with organized crime and therefore is potentially vulnerable to money laundering. Due to persistent inflation and a high level of dollarization of the economy, a significant volume of foreign-currency cash transactions eludes the banking system. Casinos and gaming establishments are abundant. Economic decision-making in Belarus is highly concentrated within the top levels of government. Government agencies have broad powers to intervene in the management of public and private enterprises.

In July 2000, Belarus' Law on Measures to Prevent the Laundering of Illegally Acquired Proceeds (AML Law) entered into force. The present version of the law was last amended on January 4, 2003. According to Government of Belarus (GOB) officials, the AML Law criminalizes drug and nondrug related money laundering, although this is not explicitly stated in the law. Article 235 of the Belarusian criminal code ("Legalization of illegally acquired proceeds") stipulates that money laundering crimes may be punishable by fine or prison terms of up to ten years. The 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.

The AML measures described in the law apply to all entities able to conduct financial transactions in Belarus. Such entities include bank and nonbank credit and finance institutions; stock and currency exchanges; investment funds and other professional dealers in securities; insurance and reinsurance institutions; dealers' and brokers' offices; notarial offices (notaries); casinos and other gambling establishments; pawn shops; and other organizations conducting financial transactions. Under the law, natural and legal persons, government entities, and entities without legal status are subject to criminal liability.

The AML Law authorizes the following government bodies to monitor financial transactions for the purpose of preventing money laundering: the State Control Committee; the Ministry of Foreign Affairs; the Ministry of State Property and Privatization; the Ministry of Finance; the National Bank; the State Committee for Financial Investigations; the National Tax Inspectorate; the State Committee for Securities; the State Customs Committee; and other State bodies. The law does not ascribe specific areas of responsibility to each agency, or a mechanism through which the AML activities should be coordinated.

The Belarusian banking sector consists of 28 banks, 12 of which are foreign institutions. The State-owned Belarus Bank is the largest, most influential bank in Belarus. Four other state banks and one private bank comprise the majority of the remaining banking activities in the country. Financial institutions are obligated to register transactions subject to special monitoring and transmit the information to the relevant monitoring agency. Financial transactions that are subject to special monitoring include cash and deposit transfers, bank account operations, international transfers, wire transfers, asset transfers, transactions involving loans, transfers of movable and immovable property, property donations and grants. A one-time transaction subject to special monitoring which exceeds approximately $15,350 for natural persons, or approximately $153,500 for legal persons and entities must be registered in accordance with the law. If the total value of transactions conducted in one month exceeds the abovementioned thresholds, and there is reasonable evidence suggesting that the transactions are related, then the transaction activity must be registered.

Financial institutions conducting transfers subject to monitoring are required to submit information about such transfers in written form. Financial institutions should identify the natural or legal person ordering the transaction and/or identify the person on whose behalf the transaction is being placed; disclose information about the beneficiary of a transaction; account and document details used in the transaction; the type of transaction; the name and location of the financial institution conducting the transfer; and the date, time and value of the transfer. The law does not specify required timeframes for reporting, or penalties for noncompliance. The law provides "safe harbor" for banks and other financial institutions that provide otherwise confidential transaction data to investigating authorities, provided that the information is given in accordance with the procedures established by law.

Failure to register and transmit information regarding such transactions may subject the bank or financial institution to criminal liability. For the majority of transactions conducted by banking and financial institutions, the relevant monitoring agency is the National Bank of Belarus. According to the National Bank, information on suspicious transactions should be reported to the Bank's Department of Bank Monitoring. Although the banking code stipulates that the National Bank has primary regulatory authority over the banking sector, in practice, the Presidential Administration exerts significant influence on central and state commercial bank operations.

The State Control Committee (SCC), the National Tax Inspectorate, and the Ministry of Interior have the legal authority to monitor and investigate suspicious financial transactions. In September 2003, President Lukashenko decreed the establishment of a financial intelligence unit (FIU) within the SCC and named the FIU as the primary government agency responsible for gathering, monitoring and disseminating financial intelligence. Belarus' FIU is not a member of the Egmont Group of FIUs. According to a GOB official, Russia represented Belarus at the Egmont Group meeting in October 2003 and agreed to sponsor Belarus' membership.

Terrorism is considered a serious crime in Belarus. Under the Belarusian Criminal Code, the willful provision or collection of funds in support of terrorism by nationals of Belarus or persons in its territory constitutes participation in the act itself in the form of aiding and abetting. Belarus' law on counterterrorism also states that knowingly financing or otherwise assisting a terrorist organization or group constitutes terrorist activity.
Belarus does not have a separate law criminalizing the financing of terrorism. Belarus' anti-money laundering law refers to the laundering of all proceeds obtained in violation of the law. The law does not make specific mention of terrorism. In a 2002 report to the UN Security Council Counter Terrorism Committee established pursuant to UNSCR 1373, the GOB refers to its AML legislation as a measure to combat terrorist finance.

The seizure of funds or assets held in a bank requires a court decision, a decree issued by a body of inquiry or pre-trial investigation, or a decision by the tax authorities. In January 2002, the Board of Governors of the National Bank passed a decision on suspending debit and credit operations on accounts of terrorists, terrorist organizations and associated persons. The decision outlines a process for circulating to banks the list of individuals and entities included on the UN 1267 Sanctions Committee's consolidated list. The National Bank is required to disseminate to banks list updates and other information related to terrorist finance as it is received from the Ministry of Foreign Affairs. The decision gives banks the authority to freeze transactions in the accounts of terrorists, terrorist organizations and associated persons. Belarus has not identified assets belonging to individuals or entities included on the UN 1267 Sanctions Committee's consolidated list.

Belarus has signed bilateral treaties on law enforcement cooperation with Bulgaria, Lithuania, People's Republic of China, Poland, Romania, Turkey, the United Kingdom, and Vietnam. Belarus is also a party to five agreements on law enforcement cooperation and information sharing among CIS member States, including the Agreement on Cooperation among CIS Member States in the Fight against Crime and the Agreement on Cooperation among Ministries of Internal Affairs in the Fight against Terrorism. In June, Belarus ratified the UN Convention against Transnational Organized Crime. Belarus is a party to the 1988 UN Drug Convention and nine of the 12 conventions on counterterrorism. Belarus has signed, but not yet ratified, the UN International Convention for the Suppression of the Financing of Terrorism.

The GOB has taken initial steps to construct an anti-money laundering/antiterrorist financing regime. Belarus should continue to enhance and implement its current legislation and should amend its AML Law in order to meet the revised FATF Forty Recommendations. The GOB should provide adequate resources to enable its designated FIU to operate efficiently and should establish a mechanism to improve the coordination between agencies responsible for enforcing anti-money laundering measures. The GOB should criminalize the financing of terrorism and become a party to the UN International Convention for the Suppression of the Financing of Terrorism.