International Narcotics and Law Enforcement Affairs
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The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
This site is not updated so external links may no longer func
us with any questions about finding information.
NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
International Narcotics Control
Strategy Report (1997)
Released by the Bureau for International
Narcotics and Law Enforcement Affairs,
U.S. Department of State
Washington, DC, March 1998
2/26/98: Secretary of State Madeleine Albright, Attorney General Reno, and Director of
National
Drug Control Policy General McCaffrey remarks on the release of the 1997 INCSR
2/26/98: Acting Assistant Secretary for International Narcotics and Law Enforcement
Affairs
Randy Beers briefing on the release of 1997 INCSR
CONTENTS
INTRODUCTION: LEGISLATIVE BASIS FOR THE INCSR
POLICY AND PROGRAM DEVELOPMENTS
Policy and Program Overview for 1997
Next Steps
Coca and Cocaine
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Heroin and Opiates
International Organizations
Demand Reduction
Chemical Control
Money Laundering and Financial Crimes
Methodology
Status of Potential Worldwide Production
Cultivation and Production Charts
PARTIES TO 1988 UN CONVENTION [An excel file]
FY 1997--FY 1999 FISCAL SUMMARY AND FINANCIAL BUDGET [both are excel
files]
INTERNATIONAL TRAINING
OTHER USG ASSISTANCE PROVIDED
Drug Enforcement Administration
United States Coast Guard
United States Customs Service
SOUTH AMERICA
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Paraguay
Peru
Uruguay
Venezuela
CANADA, MEXICO, AND CENTRAL AMERICA
Belize
Canada
Costa Rica
El Salvador
Guatemala
Honduras
Mexico
Nicaragua
Panama
THE CARIBBEAN
Aruba
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Bahamas
Cuba
Dominican Republic
Guyana
Haiti
Jamaica
Netherlands Antilles
Suriname
Trinidad and Tobago
Eastern Caribbean
Antigua and Barbuda
Barbados
Dominica
Grenada
St. Kitts and Nevis
St. Lucia
St. Vincent and the Grenadines
French Caribbean
Dependent Territories of the United Kingdom
Anguilla, Montserrat, British Virgin Islands,
Cayman Islands, Turks and Caicos Islands
SOUTHWEST ASIA
Afghanistan
Bangladesh
India
Iran
Maldives
Nepal
Pakistan
Sri Lanka
SOUTHEAST ASIA AND THE PACIFIC
Australia
Burma
Cambodia
China
Hong Kong
Indonesia
Japan
Laos
Malaysia
Philippines
Singapore
Taiwan
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International Narcotics and Law Enforcement Affairs
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Thailand
Vietnam
EUROPE AND CENTRAL ASIA
Albania
Armenia
Austria
Azerbaijan
Belarus
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Georgia
Germany
Greece
Hungary
Iceland
Ireland
Italy
Kazakstan
Kyrgyzstan
Latvia
Lithuania
Luxembourg
Malta
Moldova
Mongolia
Netherlands
Norway
Poland
Portugal
Romania
Russia
Slovakia
Spain
Sweden
Switzerland
Tajikistan
Turkey
Turkmenistan
Ukraine
United Kingdom
Uzbekistan
Former Yugoslav Republic of Macedonia
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Serbia/Montenegro: Federal Republic of Yugoslavia
AFRICA AND THE MIDDLE EAST
Benin
Cote d'Ivoire
Egypt
Ghana
Israel
Jordan
Kenya
Lebanon
Morocco
Nigeria
Saudi Arabia
Senegal
South Africa
Syria
Tanzania
Other Africa and Middle East
Botswana
Ethiopia
Mozambique
Seychelles
Swaziland
Togo
Uganda
United Arab Emirates
Zimbabwe
CHEMICAL CONTROLS
MONEY LAUNDERING AND FINANCIAL CRIMES
What Is Money Laundering
What We Need to Do
Country Chart
Comparative Tables
Country Reports
11/9/97: Text of a Letter from the President to the Chairmen and Ranking Members of the
House Committees on Appropriations and International Relations and the Senate
Committees on Appropriations and Foreign Relations
2/26/98: Memorandum from the President to the Secretary of State on Certification for
Major Illicit Drug Producing and Drug Transit Countries
1997-1998 Individual Country Statements of Explanation
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Drug Control Fact Sheets
Overview
The Majors List
Belize
Colombia
Haiti
Iran
Mexico
Nigeria
Pakistan
Paraguay
COMMON ABBREVIATIONS
CBRN
CFATF
DEA
DOJ
ESF
FATF
FBI
FinCEN
INCSR
INM
INL
IRS
IRS-CID
JICC
MLAT
NBRF
NNICC
Caribbean Basin Radar
Network
Caribbean Financial Action
Task Force
Drug Enforcement
Administration
Department of Justice
Economic Support Fund
Financial Action Task Force
Federal Bureau of
Investigation
Financial Crimes Enforcement
Network
International Narcotics Control
Strategy Report
See INL
Bureau for International
Narcotics Control and Law
Enforcement Affairs
Internal Revenue Service
Internal Revenue Service,
Criminal Investigation
Division
Joint Information
Coordination Center
Mutual Legal Assistance
Treaty
Northern Border Response
Force
National Narcotics Intelligence
Consumers Committee
Organization of American
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International Narcotics and Law Enforcement Affairs
OAS
OAS/CICAD
OPBAT
UN
Convention
UNDCP
USAID
USG
ha
HCl
kg
mt
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States
Inter-American Drug Abuse
Control Commission
Operation Bahamas, Turks and
Caicos
United Nations Convention
Against Illicit Traffic in
Narcotic Drugs and
Psychotropic Substances
United Nations International
Drug Control Program
Agency for International
Development
United States Government
Hectare
Hydrochloride (cocaine)
Kilogram
Metric Ton
Access 1996 International Narcotics Control Strategy Report
International Narcotics and Law Enforcement
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2/26/98 Albright, Attorney Gen. Reno, & McCaffrey re Drug Report
Page 1 of 7
The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
This site is not updated so external links may no longer func
us with any questions about finding information.
NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
Secretary of State Madeleine K. Albright,
Attorney General Janet Reno, and Director of National Drug
Control Policy General Barry R. McCaffrey
Remarks on the International Narcotics Control Strategy Report for
1997
Washington, D.C., February 26, 1998
As released by the Office of the Spokesman
U.S. Department of State
Photo curtesy: C-Span
Albright at press briefing
MR. RUBIN: Excuse me.
QUESTION: Adios.
MR. RUBIN: Gracias. Let me
tell you how we're going to
proceed. Secretary Albright will
have a brief statement. She will
then introduce Attorney General
Reno, and then General
McCaffrey will speak. They
have agreed to take a couple of
quick questions, and then Acting
Assistant Secretary for International Narcotics and Law Enforcement Matters Randy Beers
will stay here through the certification decisions in detail. With that, Secretary Albright.
SECRETARY ALBRIGHT: Thank you very much, Jamie. Let me, before we go into the
certification issues, let me just make a couple of remarks about Iraq. I think in the last hours
-- in the last 48 hours -- some have jumped to conclusions about the agreement, and I must
say that I think that as a result of statements made, that it will be very clear that those
conclusions have turned out to be wrong.
Ambassador Butler has made very clear that under the agreement, he is in charge, as we
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insisted. UNSCOM will have operational control over the inspections, and this new group is
under UNSCOM.
Ambassador Butler, if he is able to go through with the procedure as outlined -- and that is a
big if -- he will be, in fact, able to continue the excellent work that UNSCOM has been
doing in terms of trying to inspect these various places. And in fact, he himself has said that
he will have access to more resources and have the ability to work even wider.
Now, let me also say, Saddam Hussein, in this agreement, had said that he would open up
all sites to unfettered, unconditional inspection. That is on paper. We obviously have no
illusions about Saddam Hussein. But if Ambassador Butler, as Chairman of UNSCOM, is
able to carry out his duties, then I think that we should understand that we are really better
off than we were, because we are better off in combating this threat.
First of all, UNSCOM will be able to continue its work, and as we've all said, UNSCOM
has in fact been able to destroy more weapons of mass destruction than during the Gulf
War. And if this does not work, then the whole world will have seen Saddam Hussein
renege on an agreement that he made, and we will have more support for using other
methods -- military force -- to make sure that his weapons of mass destruction threat is
diminished and that he can't threaten his neighbors.
Now, let me proceed to our report. Today President Clinton is sending to Congress his
annual decisions on narcotics certification. Also, the State Department will send its report
on International Narcotics Control Strategy to Capitol Hill.
I'm here briefly to discuss the President's key decisions. And I want to begin by welcoming
my Cabinet colleagues, Attorney General Reno and Director of the Office of National Drug
Control Policy, General McCaffrey. Their presence symbolizes the strong team effort we
are making in the war against drugs.
This need for teamwork is important at home; it is also essential overseas. Every nation has
a stake because wherever illegal drugs are found, societies suffer. Entire economies may be
destabilized; police forces corrupted; judicial systems undermined. Young people squander
their talents and too often their lives; and ordinary citizens lose trust in their institutions.
Since we're all vulnerable, we must all do our share to defeat the drug trade in every nation
at every point -- from the reduction of demand to the eradication of crops to the prosecution
of drug kingpins.
Clearly, we will succeed in our efforts only if consuming countries, producing countries and
transit countries work together not with their fingers pointed or their elbows out, but with
their arms linked. The certification process was intended to encourage just such
cooperation; not to impose anything, but to spur nations everywhere to act in their best
interests, and to do so together, with resolve, to get results.
We make our certification decisions not to stand above other countries in judgment, but to
hold them up to the same public scrutiny to which we hold ourselves. Our National Drug
Plan is a public document, and we expect to be measured publicly by its effectiveness. So
let me assure all our partners that we are not asking of them any more than we ask of
ourselves.
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This year, the President granted full certification to 22 of the 30 major drug-producing and
transit countries on our list. Four nations -- Cambodia, Colombia, Pakistan and Paraguay -were not certified for cooperating, but were granted a national interests waiver. Four others
were denied certification outright. These are Afghanistan, Burma, Iran and Nigeria.
Acting Assistant Secretary Randy Beers can provide more details about these decisions in
response to your questions. But I want to say a few words about the countries denied
certification, and about our anti-drug partnership in the Western Hemisphere.
In recent years, the production of heroin has been increasingly concentrated in two countries
-- Afghanistan and Burma. Opium and heroin remain Afghanistan's largest sources of
income, a reality for which each of the major factions competing for power in that country
deserve blame. Our assessment of Burma's performance also has not changed. The Burmese
Government continues to allow the most notorious drug lords in Southeast Asia to keep the
two things they value most -- their money and their freedom.
Nigeria remains the hub of African narcotics trafficking. Its gangs run networks that bring
in much of the heroin which ends up in the United States. The Nigerian Government has
failed to make life difficult for international criminal enterprises headquartered there, and
has broken direct promises on extraditions and related actions.
In Iran, however, the trend is encouraging. Counter-narcotics efforts are showing vigor, and
the threat posed by the transshipment of drugs is being taken more seriously. Although we
are unable to certify now because we lack hard data to verify the extent of reported
progress, we are seeking more information and will respond appropriately to real
improvements.
Finally, here in the Americas, we have made significant gains.
Peru, for example, was the world's largest grower of coca in 1996. Last year, under
President Fujimori's leadership, it reduced cultivation to the lowest level in a decade. That
has deprived the Colombian syndicates of more than 100 metric tons of cocaine. And that,
in turn, has met in a single year the five-year goal of reducing global cocaine supplies that is
part of our national drug strategy.
Colombia received a national interest waiver this year. Clearly, progress there is essential to
turn the tide in the drug war. The Colombian National Police and counter-narcotics forces
have conducted an effective eradication and interdiction effort. But the current government
has not demonstrated full political support for counter-narcotics efforts.
Coming on the eve of that country's congressional and presidential elections, the waiver
decision is intended to lay the groundwork for increased future cooperation, and to support
those in Colombia who are striving to strengthen the rule of law and buttress their embattled
democracy.
Mexico received full certification this year, as a result of the strong cooperation we have
received since Presidents Clinton and Zedillo made this a top priority in our bilateral
agenda. Over the past year, Mexico has enacted legal reforms to combat drug trafficking,
organized crime and money laundering. It has formed specialized investigative units, sought
out and punished official corruption and passed a comprehensive chemical control law.
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Drug seizures, arrests and extraditions were up. And earlier this month, General McCaffrey
and Mexican Foreign Secretary Green announced completion of our bi-national drug
strategy.
This bi-national strategy is but one element of our effort to establish an effective anti-drug
alliance throughout the hemisphere, a subject that will be on the agenda at the summit of the
Americas in Santiago in April.
Thank you, and let me now turn the floor over to the Attorney General.
ATTORNEY GENERAL RENO: Thank you, Secretary Albright, for inviting me to
participate today. And we express to you and our colleagues at the State Department our
gratitude for the leadership that you have exhibited in sharing the interagency deliberative
process, which has led up to today's announcements of the certification decisions. The
decisions and the report announced today were the product of open and honest analysis and
debate, and represent our common judgments.
We in law enforcement fully agree with the Secretary. The success against the threat of
international narcotics trafficking is not possible without mutually supportive cooperative
efforts between and among source, transit and consuming nations. Within the law
enforcement community, we believe that the certification process provides the necessary
assessments and rallying points upon which we can move ahead in cooperation, both
domestically and internationally.
Narcotics traffickers must be held accountable for their crimes. They must be answerable to
justice where their crimes occur. A critical element of international cooperation against
trans-national criminals is an effective program of timely, responsive and comprehensive
extradition of criminals, including the extradition of nationals, so that no one in this world
will have a place to hide from prosecution.
Such extradition practices were and are clearly envisioned by the Vienna Convention, to
which the overwhelming majority of nations are now parties. We are particularly heartened
by the progress being made in this area by our Mexican partners and the signing of our new
bilateral extradition protocol. We are hopeful, very hopeful, that the government of
Colombia will adopt similar practices and will repeal, without restriction, the constitutional
prohibition against extradition of nationals.
With respect to Colombia, although the President has announced his decision not to certify
Colombia but to provide a national waiver, this announcement should not be taken as an
expression of lack of confidence in the courage and the great dedication of the Colombian
National Police or the people of Colombia. To the contrary, the Colombian National Police,
under the great leadership of General Rosso Jose Serrano, is recognized internationally as
an effective force against the international trafficking cartels.
In addition, the Colombian private sector, especially the business leaders and business
associations, have been instrumental in effecting real progress in Colombia, and in defying
the corrupting influence of the traffickers.
Thank you for permitting us to join with you today, and now I will turn it over to General
Barry McCaffrey.
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GENERAL MCCAFFREY: Well, let me very briefly just thank the Secretary of State for
the leadership that her team has provided to this interagency process. There has been a full
expression of viewpoints. Her team on international drug issues includes, obviously, the
Attorney General, who has a preponderance of some of our actions in this area; the
Secretary of the Treasury; Secretary of Defense; our CIA Director, George Tenet; and
Admiral Bob Kramek, acting as interdiction coordinator.
So all of us have been involved in these decisions. And the leadership, particularly, of
Ambassador Wendy Sherman and Randy Beers, I think has brought us together on the
subject quite nicely. And I thank you, Madeleine, for the way you've brought us all along
with your thinking.
Let me also, if I may, echo the earlier words of the Secretary of State that we recognize that
at the end of the day, we are supporting multinational cooperation on the drug issue. We
look forward to the discussions at Santiago, Chile, in the Summit of the Americas. We are
very respectful of the thinking of Secretary Gaviria and CICAD and the OAS. We look
forward to our discussions at the June (UN Special Session of the General Assembly on
Narcotic Drugs). And the leadership of Mr. Pino Arlacchi has been absolutely superb over
his last several months in office.
So we understand that although certification is a U.S. federal law that we must and will
comply with fully, we look forward to enhancing partnership and a shared understanding of
the threat of drug abuse to all of our democratic societies.
Let me also underscore, if I may, that President Clinton's national drug strategy is
fundamentally based on the prevention of drug abuse and the treatment of drug abusers in
the United States. The central responsibility we have as a society is to look at our own six
percent of the population whose abuse of these drugs fuels international crime with upwards
of $50 billion a year. That will be our promise to the international community.
And finally, if you may allow me to note the absolutely superlative cooperation between the
United States and Mexico. As Secretary Albright has pointed out, we have signed and
developed a common understanding of the threat. A few weeks ago, we were able to release
a joint strategy to deal with this threat. We have now committed ourselves, in the coming
months, to developing concrete performance measures of effectiveness, by which the two
parties can assist each other in this common effort.
And I might add that our cooperation will not be merely in the vital areas of police and
judicial cooperation, intelligence, the armed forces, but also -- perhaps even more
importantly -- Secretary Shalala and I will chair, in March, in El Paso, the first U.S.Mexican demand reduction conference. We'll bring together several hundred people from
both countries to talk about the common threat, in particular, to the hundred million or so
people who live along that common border, of drug abuse as a threat to our families and our
workplaces.
So we think that, in many ways, the rather revolutionary change in the way the U.S. and
Mexico deal with each other on this issue is a model that we may, all of us, be able to learn
from.
Secretary Albright, thank you again for your leadership, and I'm glad to be here.
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QUESTION: Madame Secretary, as you know, there's a lot of criticism about the
certification process. I wonder if the administration would support a move to do away with
it?
SECRETARY ALBRIGHT: Well, I think that the certification process is mandated by
U.S. law, and can only be altered through U.S. legislative processes. But on a separate track,
as General McCaffrey mentioned, we are working with other countries through the OAS
anti-drug commission, CICAD, and to explore the possibility of a multilateral mechanism to
monitor and evaluate drug control efforts in the Western Hemisphere.
QUESTION: Madame Secretary, why doesn't the United States have its own efforts also
certified, and why can't it publish in this list the same way other countries' efforts are
judged? Why can't it judge its own efforts publicly, so other countries won't say that it's
only the United States pointing the finger, and it doesn't point the finger at itself? Why can't
our failures also be underscored in writing?
GENERAL MCCAFFREY: Let me, if I may -- and I think Secretary Albright already
touched on it. We do have a public document, a national drug strategy. And associated with
this document, for inspection by the news media as well as our Congress, is a budget so you
can look at the resources we're willing to put against this problem.
But most importantly, to directly answer your question, this is a 141-page document that the
President has approved, and the Drug Cabinet Council have approved, that have very
concrete performance measures of effectiveness. So what we are suggesting to the U.S.
Congress is that we will leave ourselves accountable to achieve these results. We put down
10-year goals and five-year goals. In the coming year, we will attempt to develop annual
goals.
So I think your point is a very good one, and we have identified 88 areas by which we
intend to grade ourselves and to ask the U.S. Congress to participate in that process. So I
think your point is an excellent one.
QUESTION: Madame Secretary, you were on the Hill this morning, and there's been much
talk by senators about toppling Saddam Hussein, and you've spoken emphatically about the
position of the U.S. on this. However, would you rule out -- or could you say if the U.S. is
looking into ways to thwart him in a manner which would be toppling him, if you will, and
dumping him out of -- unseating him? And would that involve the CIA at all?
SECRETARY ALBRIGHT: First of all, let me say what we have been saying and we
continue to say, which is that we look forward to working with a post-Saddam regime. We
have worked with opposition groups in the past, and we'll be working with them effectively
in the future.
We do believe that it is important to contain the threat of Saddam Hussein's weapons of
mass destruction and his ability to threaten his neighbors. We know that there are many
people who are thinking that it would be a good idea for him not to be there, and I don't
think anybody would shed any tears. But our policy is the policy which is the best for our
national security, which is to contain this threat. And I'm not going to discuss any -QUESTION: Madame Secretary --
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MR. RUBIN: Last question over here, please.
QUESTION: Madame Secretary, it's on Mexico. There's a report that the U.S. forces still
trying Mexican officers in the United States that it's an illegal issue and makes a violation of
the Mexican law. My question is, the United States is going to continue asking the Mexican
Government to violate the laws on the way to have more enforcement by the Mexican
Government to combat narco-traffic?
GENERAL MCCAFFREY: Well, let me -- I won't respond to Mexican law questions, but
what is clearly our purpose is to support, where the Mexican Government feels it is
appropriate, with training, technology and support. That's been DEA-FBI academy training;
it's been judicial seminars; it's been shared intelligence; it's been support for the demand
reduction -- Secretary Shalala and Dr. Nelba Chavez; and it certainly includes full support
for Mexican navy, military and intelligence requirements where they feel it's appropriate.
Thank you.
[End of Document]
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Briefing by Asst. Sec. Randy Beers on 1997 Narcotics Report
Page 1 of 9
The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
This site is not updated so external links may no longer func
us with any questions about finding information.
NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
Andy Beers
Acting Assistant Secretary for International Narcotics and
Law Enforcement Matters
On-the-record briefing on the release of the 1997 International Narcotics
Control Strategy Report (INCSR)
Washington, DC, February 26, 1998
MR. RUBIN: Thank you very much. Randy Beers will now come to the podium and take all your
specific questions.
ASSISTANT SECRETARY BEERS: Well, thank you all--the Secretary, General McCaffrey, the
Attorney General. They've covered most of the major points on the certification issue, and I'll take
questions. But first, let me make sure that everybody has available or is aware of what is available in the
way of information that we are providing.
You should all have your green copies of the INCSR, the International Narcotics Control Strategy
Report. You should have a red package, which contains in it a description of the process; the law; the '88
UN Convention. After questions, there should be available at the exits the fact sheets on eight countries-Belize, Colombia, Mexico, Pakistan, Iran, Paraguay and Syria and Lebanon as well--as well as the 30
statements of explanation for the 30 major countries which were certified today. So you'll have available
all of that information.
I believe also Director McCaffrey's remarks will be available at the exits, as well. The Secretary's
remarks will probably be available later in the day. Let me take questions now.
QUESTION: Mr. Beers, did you inform Congress beforehand about the waiver for Colombia? And did
you get any reaction from their members?
ASSISTANT SECRETARY BEERS: The procedure is that as soon as the President has signed and
informed the Secretary of State that the document has been signed, Members of Congress are called by
members of the Administration. They are called directly. I attempted to speak to five members of
Congress. I didn't get through to any of them, but the calling attempt is made. Those calls began about
11:00 o'clock. this morning.
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So did anyone get through? I'm sure someone got through to somebody. The attempt is made, in the
spirit of the law.
QUESTION: Did you get any reaction?
ASSISTANT SECRETARY BEERS: No, not that I'm aware of.
QUESTION: Senator Coverdell has said that he wants to know why Mexico didn't also get just a
waiver, and is scheduling hearings this afternoon on it.
ASSISTANT SECRETARY BEERS: There are some hearings this afternoon, that's correct. I think
that the Secretary and General McCaffrey both spoke quite eloquently on the basis of the decision. But
let me simply repeat again what they had already said.
Mexico, in the course of the past year, has implemented a broad-based strategy to address the serious
drug problems that exist in Mexico, that they acknowledge. They have passed new legislation to control
the diversion of chemicals. They have released new regulations to strengthen the money-laundering
control regime. They have increased cocaine seizures and crop eradication. They have initiated
meaningful institutional reforms in the criminal justice system. And the Mexican Government has
worked closely with the United States to build an effective partnership, as indicated by the binational
strategy which Director McCaffrey and Foreign Secretary Green announced last week.
So I think that we have the basis of a solid cooperative arrangement, relationship between ourselves and
Mexico. And Mexico is fully certified based on the facts.
QUESTION: There is a new GAO report released today - GAO report that was released this morning
on the fact that supposedly the decertification of Colombia last year could have been detrimental to the
drug fight directly in Colombia. I don't know if you're familiar with the report, if you could comment on
it. And also, I wanted to ask you if your recent visit to Colombia helped in any way in the decision this
year.
ASSISTANT SECRETARY BEERS: Let me talk briefly about the GAO report, which I have not had
an opportunity to read but have some familiarity with. With respect to the central charge which you
make in your statement, we disagree that the decertification process has harmed Colombia. One of the
general charges which people make is that we have decreased assistance to Colombia as a result of the
decertification. In fact, our calculations indicate that that is not the case; the opposite is true.
In 1995, we provided approximately $28.85 million; in 1996, we provided approximately $62.93
million; in 1997, we provided $95.95 million. And we expect that the total this year will be comparable
or greater. So if one measures it simply in terms of assistance, we do not regard that to be the case. If
one looks at other statistics, in the case of the performance of the Colombian National Police, I think it
will also be clear that those statistics have risen over this same time frame, which is why we continue to
say, in every instance, that the decisions to decertify Colombia in the preceding two years were not
related to the performance of the Colombian National Police, who have performed admirably and
courageously.
With respect to my own trip to Colombia and this decision, as I came to this job from elsewhere, but
with some experience in the counter-narcotics world, I came with the expressed desire on my own part
to move immediately to understand the situation in Colombia, because it was my own personal view that
Colombia was at a critical turning point and that we needed to recognize that and do something about it.
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My trip to Colombia allowed me to familiarize myself again with the situation on the ground. And
General Serrano and the minister of defense took me around the country and showed me what their
forces were doing; and I spoke to the leadership in the Ministry of Defense, as well as the National
Police and other government officials. And I came back very encouraged that the prospects for
cooperation in the future are significant and that the government is prepared to move in that direction,
particularly under the leadership of General Serrano.
QUESTION: Yes. Thank you. It is reported today that the--and has been said by the Secretary, that
there will be a multinational certification force or group. Will this process be run out of the Organization
of American States, as is being reported? Is that what's going to happen to the certification process--that
the responsibility is going to be spread out?
ASSISTANT SECRETARY BEERS: I think that it's premature to talk about precisely where this
process is going to end up, but I can talk very briefly about what we're doing now.
In association with the Santiago Summit, which is coming up, and in part of our general effort to
increase the awareness and attention of countries in the hemisphere to the drug problem, we have begun,
in that context, to discuss the concept of a multinational cooperative effort against drugs. This represents
a logical progression from earlier drug summits at Cartagena and San Antonio, in previous
Administrations, and the Summit of Americas earlier in this Administration, in which we looked
seriously at expanding our drug cooperation within the hemisphere to an increasingly stronger effort.
This, then, forms the initial basis, followed by a general concept of each nation developing its own
national strategy and its own objectives and measures of effectiveness. At the end of that process, it may
be that we will come to decide that we want, then, to look at one another's individual efforts, both to see
how we can fit them together more effectively, in order that we deal with what is a transnational issue in
an international fashion. And then we can also look at whether or not the effectiveness of those
programs accords with the effectiveness of other countries' programs. So that it could be, at the end of
that process, that nations will look at and make judgments on one another's own national strategies and
effectiveness.
But that is a very long-term goal, and I wouldn't want to say how that's going to end up or who's going
to run it or exactly how it will be run. But that's the general framework that we're talking about.
QUESTION: So the U.S. may continue to do certification?
ASSISTANT SECRETARY BEERS: The U.S. is required by law to do certification. Until Congress
changes that law, we will continue to obey the law.
QUESTION: Can you tell us any more about the progress that you say you see in Iran? And do you
plan any attempt at direct cooperation with the Iranians on candid narcotics strategy?
ASSISTANT SECRETARY BEERS: As the Secretary indicated, there have been reports which are
uncorroborated that suggest that Iran is in fact making progress in the counter-narcotics area. Over the
course of the next year, we will seek in a variety of ways to corroborate those reports so that we can
make a determination based on confirmable evidence.
I'm not at this time in a position to tell you exactly how we're going to go about confirming that
information. So I wouldn't want to mislead you one way or the other.
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QUESTION: Yes, I would like to know exactly what are the differences in the Colombian position
right now and the difference between the two years before, when we get the certification.
ASSISTANT SECRETARY BEERS: I think that the best way to look at this year's decision is to
consider the general situation in Colombia today. Over the course of the last year, ironically as a result
of the success of the air interdiction effort in Peru and the drastic reduction in cultivation of coca in
Peru, the traffickers have begun to increase in a very significant fashion the amount of coca cultivated in
Colombia.
We saw an initial indication of that last year. It has mushroomed this year. So we are seriously
concerned that the traffickers, as a result of their efforts to consolidate their own enterprise in the area of
Colombia which is least controlled by the central government--the south and east--have presented us
with a new trafficking situation.
In addition to that, we have noticed that the guerrillas and the para-militaries have also both moved in a
more significant way into trafficking enterprise for the express purpose of obtaining additional revenue.
That makes them more vibrant forces against the central government, and we are concerned about the
deteriorating security situation in Colombia, as well. Therefore, despite the great efforts by the
Colombian national police, we have come to the conclusion that there is a requirement on the part of
ourselves and the government of Colombia for a more robust counter-narcotics program in Colombia.
And as a result of the decertification process, our ability to affect such a program is circumscribed by the
law.
So for the purpose of entering into this more robust program, we have made the determination to put
forward a national interest waiver with respect to Colombia, in order to position ourselves for deeper
and broader counter-narcotics cooperation with Colombia with the full flexibility and the kinds of
broad-based support that we will need to conduct this campaign. It is a campaign for the future, a
campaign for democracy in Colombia and the rule of law. That's the basis of this year's decision, which
we believe is different in situation from last year.
QUESTION: So in effect, Colombia has made no progress; it's just in the U.S. interest to be able to
funnel some kinds of aid and counter-narcotics efforts toward Colombia, so the waiver was granted.
ASSISTANT SECRETARY BEERS: The decision not to certify Colombia fully is an indication that
the United States is not prepared to make a judgment in that regard. So Colombian progress was not
judged to be fully cooperative with the United States, or to have conducted on their own those measures
that the 1988 UN Vienna Convention requires.
The law gives us the opportunity to make a waiver. I don't mean, however, to say that there was nothing
that the Government of Colombia did. As I have repeated, the Colombian national police and other
counter-narcotics forces in Colombia have performed admirably. Seizures are up; arrests are up;
eradication, despite the growth of coca is the largest single amount of eradication by any country in any
year. It's remarkable. But the traffickers moved more significantly than we were able to move in the
eradication area, even though in the area of targeting, there was a 25 percent decrease. They were
growing elsewhere.
QUESTION: For Colombia, what's the difference? They--what do they get now that they would not
already before with the full--the certification?
ASSISTANT SECRETARY BEERS: Certification as an instrument affects two general areas. Firstly,
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it prohibits the giving of assistance, except for counter-narcotics assistance and specialized kinds of
humanitarian assistance, which means that the U.S. does not have full flexibility to provide assistance to
Colombia.
Secondly, it means that the United States is required, in the international development banks, to vote
against funding for assistance to Colombia. It is in those areas that we now wish to retain full flexibility
to provide assistance to Colombia so that our broad-based counternarcotics cooperation is not hindered
by the effect of the decertification decision.
QUESTION: For the past three years, your government labeled President Samper as a corrupt
Colombian official. In this year's report, his name is barely mentioned. Does that mean that your
government now trusts Samper?
ASSISTANT SECRETARY BEERS: The decision not to certify Colombia was a decision that there
was not full cooperation by the government of Colombia. The three principal areas of concern, with
respect to Colombia, were the failure on the part of the Colombian Government to pass a full-scope
extradition amendment; the continued corruption which exists in the Colombian Government; and the
failure on the part of the Colombian Government to fully implement the very adequate counter-narcotics
legislation that it has on the books, in areas such as money-laundering or asset forfeiture. That's the basis
for the decision not to certify Colombia. I've explained the basis of the decision to provide a national
interest waiver.
QUESTION: And I guess, on Mexico, what do you expect the reaction in Congress will be? Do you
anticipate a battle, like last year, over this issue?
ASSISTANT SECRETARY BEERS: I have not heard any indications yet from the Congress that lead
me to believe that we will have a situation similar to last year. But let's simply go back, just for a
moment, in time, and remember last year. If you will recall, on the week in which the certification
announcement was made, President Zedillo took a very courageous act--but an act which left him
vulnerable--and that was the disclosure that his drug czar, General Gutierrez Rebollo, was, in fact, under
indictment for charges of narco-corruption. We don't have that situation this year. That's a fundamental
difference and I think at least one basis for concluding that the decision this year will not necessarily
meet with the same heated response by some members of Congress.
QUESTION: Secretary Albright and you have praised Peru's efforts in terms of combating drug traffic.
The Peruvian Government sees its own efforts as based on what they call desarrollo alternativo,
alternative development, in order to combat this, we should not generate another social problem by
displacing the campesinos, the people who grow the coca leaves. How is the U.S. government looking at
this strategy of desarrollo alternativo, alternative development? And what plans do you have in order to
support, financially or otherwise, this strategy by the Peruvian Government, which appears to be
working?
ASSISTANT SECRETARY BEERS: The United States Government fully supports this strategy by
President Fujimori. And we have, as part of our effort, assistance that will go toward their alternative
development programs in Peru, in addition to which we will also be supportive of the Peruvian
Government at a pledging conference that will take place later this year, in which other countries will be
asked to provide the same kind of alternative development assistance. We think it makes sense, and
we're prepared to support the government of Peru.
QUESTION: OK. The pledging conference will take place in the second semester of the year?
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ASSISTANT SECRETARY BEERS: I can't tell you the exact date.
QUESTION: Are you participating in the organization of this conference?
ASSISTANT SECRETARY BEERS: The conference will take place later this year; I don't know the
date. And we will be full participants in it, yes.
QUESTION: The report to Congress mentions that Mexico, during 1995, had mixed results in terms of
fighting drugs. I would like to ask you, where would you like or where would the State Department like
to see better results?
ASSISTANT SECRETARY BEERS: In Mexico?
QUESTION: Yes.
ASSISTANT SECRETARY BEERS: In the case of the certification process, as in the case of our own
judgment of ourselves, no one performs at 100 percent or we wouldn't have a drug problem today. We
want to work with the Government of Colombia in the areas that we set out in the national strategy.
There are 16 points in that strategy.
QUESTION: You mean the government of Mexico.
ASSISTANT SECRETARY BEERS: The government of Mexico, I'm sorry. And those are an
indication of areas that we want to work together. There is room for improvement, and it's across the
board.
Let me just read you the first four points of the 16: reduced demand through information, education, and
rehabilitation--that's for both of us; reduced production and distribution of drugs--that's for both of us;
focused law enforcement efforts against criminal organizations--that's for both of us; and strengthened
law enforcement cooperation, policy coordination, and ensure the safety of all of the individuals
involved in this process. Those are four examples of areas that we want to work together.
And when I say work together, as General McCaffrey said, this is a joint, this is a binational effort. So
it's not a question of the United States simply asking the government of Mexico to do A, B and C; but it
is the two countries asking themselves together to do 16 different tasks, as outlined in the binational
strategy.
QUESTION: Yes. Secretary Albright and Control Policy Director Barry McCaffrey both praised
Mexico's efforts for certification. But according to statistics here, the total arrests are down, total
seizures for--well, marijuana is the same, but heroin and methamphetamines are also down. I'm sure
Members of Congress are going to be seeing this, and they are going to ask the same question that I'm
asking right now--why are they being certified when, out of the seven elements that are used to judge it,
three of them are lower and one of them, marijuana, is basically the same?
ASSISTANT SECRETARY BEERS: I hope we're looking at the same statistics, but my indications
are that eradication of opium is up, and total crop is down; that eradication of cannabis, while smaller
than last year, still left a smaller overall crop; that seizures of opium are up; heroin is down; cocaine is
up significantly; marijuana is roughly the same; and that methamphetamines are down somewhat.
Arrests of nationals are down less than 10 percent, more like five percent. And the total number of labs
destroyed is down somewhat.
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That's a record, we believe, that indicates that the government of Mexico, across the board, when you
put everything together, is making a quite reasonable and, in fact, we think important move against drug
trafficking. So, I mean, we can each quote from our statistics, but I find that a basis, on those figures
alone, for saying that, in that statistical area, that we believe that Mexico is moving forward.
QUESTION: Because some of the countries on the list were objected to by Members of Congress, do
you expect any sort of backlash, budgetary-wise, since this is the budget cycle now, that some countries
are on the list that shouldn't be, according to Members of the Congress and otherwise?
ASSISTANT SECRETARY BEERS: As I said earlier, we haven't really had much in the way of a
direct congressional reaction to these decisions, because they weren't known before today. But I would
simply say that with respect to the issue of counternarcotics assistance, one of the reactions on the part
of Congress can reasonably be to increase counternarcotics assistance in order to do a better job, if they
think that the job that's being done is inadequate.
QUESTION: President Samper of Colombia is expected to claim vindication with this decision. Should
he?
ASSISTANT SECRETARY BEERS: As I indicated earlier, the national interest waiver is a national
interest waiver for the future.
QUESTION: Can you elaborate?
ASSISTANT SECRETARY BEERS: Over here, please.
QUESTION: What are the U.S. vital interests in Cambodia, Pakistan and Paraguay?
ASSISTANT SECRETARY BEERS: With respect to Cambodia, the national interest of the United
States, which we used as the basis for making the determination is the United States' support for
democracy. We want to be in position, should the parties come together in the course of the time ahead
leading up to elections. If they come together and if we see reasonable progress, we want to be in a
situation in which we can provide electoral and other assistance for the future. So the basic, the core
decision is support for democracy.
The same is true in Paraguay, with respect to the impending elections there. This is an important election
for Paraguay. They are an emerging democracy. And even though they were troubled by the political
difficulties surrounding that electoral process over the course of the last year, we don't want our decision
to in any way affect that progress for democracy. And we want to be in a position to support them fully.
With respect to Pakistan, the decision is more complex. While Pakistan was not fully certified this year,
we have a policy of high-level engagement across a number of areas, including narcotics, Afghanistan,
non-proliferation, counter-terrorism and Indo-Pak relations that we wanted to be in a position to
maintain as well as our support for the improvement of the economy in Pakistan. For those reasons, we
felt that it was important not to shut down our assistance or to in any way undercut that high-level
dialogue.
So we found it in our national interest to waive decertification for Pakistan.
QUESTION: One of the concerns of Members of Congress along the Mexican border is the inability of
US DEA agents to carry guns into Mexico. What kind of progress are you seeing in negotiations with
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them to be able to do that?
ASSISTANT SECRETARY BEERS: The discussions with the Mexican Government have gone on
over the course of the last year, and they continue. I cannot point today to an announcement which
would say that this issue has been entirely resolved. But I can report to you that even up into the last
week, we continue with high-level discussions between our two governments, looking toward possible
arrangements which will affect the current and future security of our agents operating in Mexico.
But let me just say, I'm not going to comment specifically on any of the specific security measures that
are already in place.
QUESTION: Members of Congress held up some of the counter-narcotics equipment for Mexico in the
last year--helicopters and things like that--because of human rights concerns. Could you describe for us
a little bit what are the safeguards that you have in place to ensure that equipment and personnel trained
by the U.S. are not involved in human rights abuses in countries such as Mexico?
ASSISTANT SECRETARY BEERS: We have a procedure which is called end-use monitoring, which
we discuss and work out with each of the countries that we provide such assistance to. We have a similar
arrangement with the Government of Mexico.
QUESTION: Personnel in Mexico, then, that are among-ASSISTANT SECRETARY BEERS: Excuse me?
QUESTION: Personnel in Mexico, then, that are monitoring the use of this equipment?
ASSISTANT SECRETARY BEERS: These personnel are U.S. Embassy officials, and they work out
these arrangements with each government, including the Government of Mexico. And we have a regular
reporting process.
QUESTION: That would apply to the people who are being trained, as well--the military people?
ASSISTANT SECRETARY BEERS: That would apply to the people who are being trained, as well;
that's correct.
QUESTION: I'm just a bit confused about what you've said on the fact that giving the waiver to
Colombia would allow for a more robust program on counter-narcotics, which will make you believe or lead you to believe that the past two years when Colombia was decertified that it did not allow for a
robust program on anti-drugs in Colombia, which in many ways would agree with the GAO report,
wouldn't it?
ASSISTANT SECRETARY BEERS: You can choose to interpret the events that way. More means
more than before. That's all it means, and that's all I'm saying.
We want to do more next year, and we believe that in order to do more, we needed to put this national
interest waiver. In the preceding year, we judged the amount of assistance that we were providing to be
adequate to the task; but we've judged that the situation has changed, and now we want to do more.
Q Just to elaborate a little bit on the last question about monitoring, the end-use monitoring. Is that
something that you do unilaterally in any given country, including Mexico, or is this something that the
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country itself accepts?
ASSISTANT SECRETARY BEERS: It would be impossible to do it unilaterally.
QUESTION: So it involves the-ASSISTANT SECRETARY BEERS: We wouldn't be following people around and looking over their
shoulders, and checking checks on clipboards.
QUESTION: Does it involve the acceptance--there's explicit acceptance-ASSISTANT SECRETARY BEERS: It has to involve the cooperation of the government involved.
QUESTION: In this case, Mexico. I'm talking just specifically about Mexico.
ASSISTANT SECRETARY BEERS: In this case, Mexico; that's correct.
QUESTION: Just one more quick one. Mexico has declared--the Mexican president has declared that
drugs are a national security hazard. Why isn't it that way in this country? Why isn't the United States'
national security threatened by the drug trade in the Western Hemisphere?
ASSISTANT SECRETARY BEERS: The United States has declared drug trafficking a national
security threat since the middle '80s, and it has been repeated by every Administration since then. It is
part of every presidential decision document on this subject.
QUESTION: Thank you.
ASSISTANT SECRETARY BEERS: Thank you all.
[end document]
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NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
INTRODUCTION: LEGISLATIVE BASIS FOR THE INSCR
The Department of State's International Narcotics Control Strategy Report (INCSR) has been prepared
in accordance with §489 of the Foreign Assistance Act of 1961, as amended ( the "FAA," 22 U.S.C.
§2291).
The 1998 INCSR is the twelfth annual report prepared pursuant to the FAA. In addition to addressing
the reporting requirements of FAA §489 (as well as § 481(d)(2) and § 804 of the Narcotics Control
Trade Act of 1974, as amended), the INCSR provides the factual basis for the Presidential narcotics
certification determinations for major drug producing and/or drug-transit countries ("Majors List")
required under FAA §490. FAA §490 requires that fifty percent of certain kinds of assistance be
withheld from all such countries, required to be identified and reported to Congress by the President
November 1 of each year, pending the President's March 1 certification determinations. If a country is
not certified, most foreign assistance is cut off and the United States is required to vote against
multilateral development bank lending to that country.
Among other things, the statute requires, with respect to each country that received INL assistance in the
past two fiscal years, a report on the extent to which the country has "met the goals and objectives of the
United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances." FAA
§489(a)(1)(A). Similarly, the President's certification determination must address whether a country,
during the previous year, has cooperated fully with the United States, or has taken adequate steps on its
own, to achieve full compliance with the goals and objectives established by the 1988 UN Drug
Convention. FAA §490(b)(1)(A), FAA §489(a)(4)(A).
Although the Convention does not contain a list of goals and objectives, it does set forth a number of
obligations that the parties agree to undertake. Generally speaking, it requires the parties to take legal
measures to outlaw and punish all forms of illicit drug production, trafficking, and drug money
laundering, to control chemicals that can be used to process illicit drugs, and to cooperate in
international efforts to these ends. The statute lists action by foreign countries on the following issues as
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relevant to evaluating performance under the 1988 UN Drug Convention: illicit cultivation, production,
distribution, sale, transport and financing, and money laundering, asset seizure, extradition, mutual legal
assistance, law enforcement and transit cooperation, precursor chemical control, and demand reduction.
In attempting to evaluate whether countries are meeting the goals and objectives of the 1988 UN Drug
Convention, the Department has used the best information it has available. The 1998 INCSR covers
countries that range from major drug producing and drug-transit countries, where drug control is a
critical element of national policy, to mini-states, where drug issues and/or the capacity to deal with
them are minimal. The reports vary in the extent of their coverage. For key drug-control countries,
where considerable information is available, we have provided comprehensive reports. For some smaller
countries where only sketchy information is available, we have included whatever data the responsible
post could provide.
The country chapters report upon actions, including plans, programs, and, where applicable, timetables
toward fulfillment of Convention obligations. Because the 1988 UN Drug Convention's subject matter is
so broad, and availability of information on elements related to performance under the Convention
varies widely within and between countries, the Department's views on the extent to which a given
country is meeting the goals and objectives of the Convention are based on the overall response of the
country to those goals and objectives.
Some countries are not yet parties to the 1988 UN Drug Convention; some do not have status in the
United Nations that would allow them to become parties. For such countries, we have nonetheless
considered actions taken by those countries in areas covered by the Convention, and plans (if any) for
becoming parties and for bringing their legislation into conformity with the Convention's requirements.
For some of the very smallest countries that are not on the Majors List, the Department has insufficient
information to make a judgment as to whether the goals and objectives of the Convention are being met.
Unless otherwise noted in the relevant country chapters, INL considers all countries with which the USG
has bilateral narcotics agreements to be meeting the goals and objectives of those agreements.
Information concerning counternarcotics assistance is provided, pursuant to section 489(b) in sections
entitled "FY 1997-1999 Fiscal Summary and Functional Budget" and "Other USG Assistance
Provided."
Statement on Certification
FAA §490(b)(2) requires that, in making determinations regarding full certification, the President
consider the extent to which each major drug producing or drug-transit country has:
z
z
z
met the goals and objectives of the United Nations Convention Against Illicit Traffic in Narcotic
Drugs and Psychotropic Substances including action on such issues as illicit cultivation,
production, distribution, sale, transport and financing, and money laundering, asset seizure,
extradition, mutual legal assistance, law enforcement and transit cooperation, precursor chemical
control, and demand reduction;
accomplished the goals described in an applicable bilateral narcotics agreement with the United
States, or a multilateral agreement; and
taken legal and law enforcement measures to prevent and punish public corruption--especially by
senior government officials--that facilitates the production, processing , or shipment of narcotic
and psychotropic drugs and other controlled substances, or that discourages the investigation or
prosecution or such acts.
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The statute provides, alternatively, that a country that cannot be certified under the foregoing standard
may be certified on the grounds that "vital national interests of the United States require" that assistance
be provided to and the United States not vote against multilateral development bank lending to such
country. FAA §490(b)(1)(B).
Major Illicit Drug Producing, Drug Transit, Significant Source, Precursor Chemical, and Money
Laundering Countries
Section 489(a)(3) requires the USG to identify: (A) major illicit drug producing and major drug--transit
countries, (B) major sources of precursor chemicals used in the production of illicit narcotics; and (C)
major money laundering countries. These countries are identified below.
Major Illicit Drug Producing and Drug--Transit Countries
A major illicit drug producing country is one in which: (A) 1,000 hectares or more of illicit opium
poppy are cultivated or harvested during a year; (B) 1,000 hectares or more of illicit coca are cultivated
or harvested during a year; or (C) 5,000 hectares or more of illicit cannabis are cultivated or harvested
during a year, unless the President determines that such illicit cannabis production does not significantly
affect the United States. FAA §481(e)(2).
A major illicit drug-transit country is one: (A) that is a significant direct source of illicit narcotic or
psychotropic drugs or other controlled substances significantly affecting the United States; or (B)
through which are transported such drugs or substances. FAA §481(e)(5).
The following major drug producing and/or drug-transit countries have been identified and notified to
Congress by the President pursuant to 490(h) of the FAA in 1997: Afghanistan, Aruba, The Bahamas,
Belize, Bolivia, Brazil, Burma, Cambodia, China, Colombia, Dominican Republic, Ecuador, Guatemala,
Haiti, Hong Kong, India, Iran, Jamaica, Laos, Malaysia, Mexico, Nigeria, Pakistan, Panama, Paraguay,
Peru, Taiwan, Thailand, Venezuela, and Vietnam.
Major Precursor Chemical Source Countries
The following countries have been determined to be major sources of precursor or essential chemicals
used in the production of illicit narcotics: Argentina, Brazil, China, Germany, India, Mexico, and the
Netherlands. Information is provided pursuant to § 489 in the section entitled "Chemical Controls."
Major Money Laundering Countries
"A major money laundering country is defined by statute as one whose financial institutions engage in
currency transactions involving significant amounts of proceeds from international narcotics trafficking.
FAA §481(e)(7). However, the complex nature of money laundering transactions today makes it
difficult in many cases to distinguish the proceeds of narcotics trafficking from the proceeds of other
serious crime. Moreover, financial institutions engaging in transactions involving significant amounts of
proceeds of other serious crime are vulnerable to narcotics--related money laundering. This year's list of
major money laundering countries recognizes this relationship by including all countries whose financial
institutions engage in transactions involving significant amounts of proceeds from all serious crime. The
following countries have been identified this year in this category: Antigua, Aruba, Australia, Austria,
The Bahamas, Brazil, Burma, Canada, Cayman Islands, China, Colombia, Costa Rica, Cyprus, the
Dominican Republic, France, Germany, Guernsey, Hong Kong, India, Indonesia, the Isle of Man, Israel,
Italy, Japan, Jersey, Lebanon, Liechtenstein, Luxembourg, Mexico, the Netherlands, the Netherlands
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Antilles, Nigeria, Pakistan, Panama, Paraguay, Peru, Russia, Singapore, Spain, Switzerland, Taiwan,
Thailand, Turkey, United Arab Emirates, United Kingdom, United States, Uruguay, and Venezuela.
Further information on these countries and United States money laundering policies, as required by
section 489, is set forth in the section entitled "Financial Crimes and Money Laundering."
[end of text]
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The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
This site is not updated so external links may no longer func
us with any questions about finding information.
NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
POLICY AND PROGRAM DEVELOPMENTS
Policy and Program Overview for 1997
For the Western Hemisphere's anti-drug effort, 1997 was a good year. We made appreciable gains in
crop reduction, in interdiction, in weakening trafficking syndicates, strengthening law enforcement, and
in targeting drug money laundering. The year's best news came from Peru, for years the world's largest
coca growing country and source of much of the semi-processed cocaine base that feeds the Colombian
cocaine industry. Three-plus years of joint efforts by US, Peruvian and Colombian forces to choke off
the "air bridge" that carries Peruvian cocaine base to Colombia for processing paid off handsomely. The
operation simultaneously deprived the Colombian cocaine trade of critical basic materials and drove
down the price of coca leaf in Peru below the break-even point. Disillusioned Peruvian growers
abandoned fields to take advantage of alternative development opportunities. As a result of the exodus,
in 1997 Peruvian coca cultivation dropped 27 percent, an extraordinary decline that occurred on top of
last year's 18 percent reduction. The USG estimates that Peru now cultivates 68,800 hectares of coca,
just slightly more than half of the estimated 129,100 hectares identified in the peak year of 1992. In fact,
Peru's coca cultivation is now at its lowest level since we began systematically estimating cultivation in
1986.
Crop control efforts in Bolivia and Colombia, the other two principal coca producers, brought both good
news and bad. The Bolivian Government's program of voluntary and involuntary eradication, enhanced
by USG assistance and alternative development incentives, brought down estimated cultivation by a
little over five percent in 1997. Though this was a relatively modest decline, it was significant since at
45,800 hectares, Bolivia's 1997 coca crop was also the smallest in ten years. Colombia was a different
story, since successful coca control operations also spurred new planting. Colombian traffickers
accelerated their campaign to plant new coca outside the traditional growing areas, both to offset heavy
losses from government eradication missions and to replace cocaine supplies cut off by the "air bridge"
denial. The Colombian syndicates unquestionably are feeling the impact of crop destruction campaigns,
since they have raised the eradication stakes by bringing in better weaponry and shifting cultivation to
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Colombian's southwest provinces of Caqueta and Putumayo, where a strong guerrilla presence makes
eradication more difficult. Despite these hindrances, crop-spraying operations destroyed more than
19,000 hectares of coca in 1997. With 79,500 hectares under cultivation at year's end, Colombia is now
the largest coca cultivating country, though in actual leaf production it still ranks behind Peru and
Bolivia. Still, even taking into account the expansion in Colombia, this year's Andean coca cultivation
total of 194,100 hectares was the lowest in a decade-proof that persistence pays.
We faced a different set of challenges in trying to limit the cultivation of opium poppy, the source of
heroin. As we note below in the section on heroin, this heavily addictive drug is gradually staging a
comeback among a new generation of users in the United States. Unlike coca, which currently grows in
only three Andean countries, opium poppy grows in nearly every region of the world. Because it is an
annual crop with as many as three harvests per year, it is much harder to eliminate, especially since
nearly 90 percent of the world's estimated opium gum production (3,630 out of 4,137 metric tons) is
produced in Burma and Afghanistan, countries where we have limited influence. An increasing amount
of the heroin entering the United States, however, comes from Colombia and Mexico, where we assist
the governments in opium poppy eradication campaigns. Since cultivation is relatively limited--between
them both countries account for less than four percent of the world's estimated production--eradication
programs can have an appreciable impact. In 1997, the USG estimates that Mexico eradicated 8,000
hectares, three quarters of its opium poppy cultivation, leaving 4,000 hectares for opium production.
Despite a major effort by the Colombian drug syndicates to increase production, Colombian authorities
kept the opium poppy crop to 6,600 hectares, approximately the same year-end level as in previous
years. Eradication sorties destroyed an estimated 7,000 hectares, slightly more than half of the poppy
under cultivation earlier in the year. The eradication results in Colombia and Mexico translate into a
potential 150 metric tons of opium--15 metric tons of heroin--that were not available to the US market.
Trafficker Woes. For a number of important Western Hemisphere drug trafficking organizations, 1997
was not a good year. The Mexican drug rings suffered the most, as the Juarez Cartel lost its boss, the
Gulf Cartel its operations manager, and the major methamphetamine smuggling ring one of its leaders.
The sudden death in July of the Juarez Cartel 's Amado Carrillo Fuentes (following plastic surgery
intended to disguise his identity) reportedly has both weakened and triggered a war of succession in that
organization. The powerful Gulf Cartel fared scarcely better. With its boss, Juan Garcia Abrego, already
in jail in the US in 1996, it suffered another blow when Mexican police collared Operations Chief, Oscar
Malherbe de Leon and Adan Amezcua Contreras, one of three brothers said to be responsible for much
of the methamphetamine flowing into the US.
In South America, a joint Peruvian-Colombian operation captured Waldo Simeon Vargas Arias, ("El
Ministro") in Bogota. Colombian and Peruvian authorities believe El Ministro was responsible for
supplying over half the cocaine base refined by the Colombian cartels. He also appears to have been a
major figure in the Colombian heroin trade. Peruvian antidrug forces caught up with long-sought drug
chief Luis Molqui ("Lucho Mosca"), while Bolivian authorities extradited another important trafficker,
Miguel Angel Seleme Rodriguez, to the US to stand trial. Although the position of cartel boss never
remains vacant for long, losing a leader inevitably hurts a drug syndicate's effectiveness. More
importantly, capturing key traffickers demonstratesto the criminals and to the governments fighting
them alikethat the syndicates are highly vulnerable to coordinated international pressure sustained over
time.
Other Advances. A long-standing element of our international drug control policy has been to
encourage and assist governments to strengthen their judicial and banking systems to narrow the
opportunities for their manipulation by the drug trade. In drug source and transit countries, law
enforcement agencies have jailed prominent traffickers, only to see them walk free following a
seemingly frivolous or inexplicable decision by a single judge. But the situation is gradually changing.
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In 1997, several countries continued the process of modernizing their laws and professionalizing their
court systems through reforms ranging from installing more modern equipment to major changes in the
way judges are appointed. Though there are still instances of judges arbitrarily dismissing evidence
against or releasing well known drug traffickers, the number of such cases is declining, as governments
make basic reforms such as giving judges better pay and greater personal protection.
Extradition. In 1997, we maintained pressure on governments to pass or amend laws and to enter into
agreements to make possible the sanction drug lords fear most--extradition to the United States. The
long sentences meted out to notorious drug criminals in the US are stark reminders of what can happen
to even the most powerful cartel leaders when they are subject to the US justice system and can no
longer manipulate their environment through bribes and intimidation. Several countries still prohibit the
extradition of their nationals. As we approach the twenty-first century, we believe that such agreements
can be made acceptable to most governments, as long as treaty provisions are reciprocal and balanced.
In 1997, Paraguay and Peru agreed to negotiate new extradition treaties with the US. We are currently
working with countries important to the anti-drug effort, such as the Dominican Republic and
Venezuela, to adopt extradition procedures along the lines of the bilateral extradition treaty signed with
Argentina in 1997 and Bolivia in 1996.
Money Laundering. We devoted considerable effort in 1997 to constricting the drug trade's access to
international banking and financial systems. Since drug money is potentially worthless until it can be
laundered and moved into legitimate financial and commercial channels, we have been working with our
partners in the Financial Action and Caribbean Financial Action Task Forces to make it as difficult as
possible for the drug trade to legitimize its fortune. While several countries' financial institutions
regrettably are still willing to accept--or even solicit--funds of questionable provenance, we have seen
important progress over the past year. Venezuela, for example, adopted new currency transaction
reporting requirements by all financial institutions; Panama established "due diligence" or "banker
negligence" laws to hold individual bankers accountable for laundered funds; and Mexico published new
anti-money laundering regulations to require the reporting of large currency and suspicious transactions.
Such measures move us closer to a common goal of eventually shutting drug money out of the
international financial system.
Formidable Opposition. Though we can take pride in these accomplishments, we are still a long way
from permanently crippling the drug trade. As one of the pillars of international organized crime, it
remains a formidable enemy. Well before transnational crime had become recognized as one of the
principal threats to international stability, the drug syndicates already had in place an impressive
network of supply centers, distribution networks, foreign bases and reliable entree into the governments
of source and transit countries. They pioneered many of today's sophisticated money laundering
techniques, hiring first-rate accountants, and investing in state-of-the-art technology. And when the
former Soviet Union collapsed, the drug syndicates were quick to recruit Eastern European chemists and
other technical specialists left unemployed by the change in political systems. Even after suffering
considerable losses, the drug trade's wealth, power, and organization equal or even exceed the resources
of many governments.
Despite our collective efforts to cut drug traffic in 1997, hundreds of tons of cocaine flowed not only to
the United States and Western Europe, but to markets in Latin America, Asia, Africa, and the countries
of the former Soviet Union. Colombian cocaine syndicates have established distribution centers on
every continent, as international drug trafficking becomes more sophisticated every year. Now Italian,
Turkish, Russian, and Nigerian crime syndicates, to name but a few, vie for a share of the business. The
relatively straightforward flow-charts of trafficking routes of a decade ago have been replaced by a
complex web of nodes and lines linking virtually every country in the world to the main drug production
and trafficking centers.
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The drug trade is adept at searching out and adapting to new opportunities. It is taking advantage of
shifts in enforcement initiatives, along with trafficking and consumption patterns, as the lines blur
between cocaine and heroin-consuming countries. We are now observing more dual drug use, with
addicts combining cocaine and heroin to offset each drug's respective stimulant and depressant effects.
National tastes are also changing. Europe, once the preserve of the heroin trade, has developed an
unhealthy and growing appetite for cocaine. This is especially true for Eastern Europe and Russia, where
cocaine sells for up to $300 per gram, three times the average cost in the US. North America, in turn, has
rediscovered heroin, as cocaine use has declined sharply. (Between 1985 and 1996, the number of
cocaine users dropped 70 percent, from 5.7 million to 1.7 million estimated users.) Although heroin use
has not been rising proportionately, the Colombian drug syndicates' major investment in heroin
production indicates that they foresee an important market for heroin in the US, most likely by
promoting dual use of cocaine and heroin by consumers. Given the drug trade's past successes in
anticipating trends, this is a disturbing development.
We have also witnessed an evolutionary process in the way drug syndicates are conducting their
international operations. In the 1980's, Mexican trafficking organizations provided the Colombian
trafficking syndicates with drug transportation services from Mexico to the Southwest region of the
United States. The Colombians paid the Mexican trafficking organizations from $1,500 to $2,000 for
each kilogram of cocaine smuggled into the United States. During the 1990's, the Colombian and
Mexican trafficking organizations established a new arrangement allowing the Mexican organizations to
receive a percentage of the cocaine in each shipment as payment for their transportation services. The
"payment-in-product" agreement enabled the organizations to become involved in the wholesale
distribution of cocaine in the United States through their own distribution cells composed primarily of
Mexicans. Prior to this, the US wholesale cocaine trade was controlled exclusively by the Colombians.
This new ethnic cohesion makes penetration more difficult and gives the syndicates leverage over family
members in Mexico.
The Threat of Synthetics: Methamphetamine. The demand for methamphetamine and other synthetic
stimulants, including amphetamines and MDMA ("Ecstasy") has been increasing not only in the
industrialized nations, but in most of the countries of the developing world. Methamphetamine, a hybrid
relative of the "speed" of the 1960's, continues to rival cocaine as the stimulant of choice in many parts
of the globe. The relative ease of manufacturing methamphetamine from readily available chemicals
appeals as much to small drug entrepreneurs as to the large international syndicates, since neither has to
rely on vulnerable crops, such as coca or opium poppy. Synthetics allow individual trafficking
organizations to control the whole process, from manufacture to sale on the street. Synthetics also have
large profit margins and can be made anywhere. Mexico is the principal foreign supplier of
methamphetamine and precursors for the United States, but there are centers of methamphetamine
production in countries as far apart as Poland, Japan, the Philippines, Burma, and Vietnam. We also
have our own domestic methamphetamine production, as demonstrated by DEA's seizure of over 1,000
methamphetamine laboratories in 1997. State authorities seized hundreds more.
Amphetamines. In Europe, the last few years have been marked by an unprecedented demand for
amphetamines and MDMA, or Ecstasy. Clandestine laboratories in the Netherlands and Poland are the
primary suppliers of amphetamines to the European market, with the United Kingdom and the Nordic
countries being the heaviest consumers. Amphetamine and MDMA production have taken a quantum
leap fueled by the need for increased supply.
MDMA (Ecstasy). The pervasive spread of MDMA, an amphetamine derivative, throughout Europe is
linked closely to the so-called "rave culture" that has swept up the Continent's young people. This
"culture" has its own trendy life-style, complete with unique preferences in music and fashion. The
association of Ecstasy with this faddish "techno-scene" is an added boon to suppliers. They count on
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lucrative returns by marketing the drug within the context of this popular movement. Ecstasy has
developed an international cult following, to the point that there are Internet sites giving detailed
instructions on how to make and use MDMA "safely." Most of the MDMA available on the European
drug market is manufactured in clandestine laboratories in the Netherlands. It is too soon to tell whether
methamphetamine and MDMA use is merely a transient but dangerous fad or whether it will become
firmly rooted in the culture of urban youth. Left unchecked, however, it might well become the drugcontrol nightmare of the next century.
Precursor Chemicals. Traffickers who manufacture stimulants and other synthetic drugs have a
vulnerable point-the need for precursor chemicals. Whereas opiates and cocaine require widely available
and relatively substitutable "essential chemicals," stimulant production requires "precursor chemicals",
such as ephedrine, pseudoephedrine or phenylpropanolamine. These chemicals have important but fewer
legitimate uses and are commercially traded in smaller quantities to discrete users. It is crucial to
chemical control that each country have an effective, flexible system that regulates the flow of key
precursor chemicals, without undue burdens on legitimate commerce. For that reason, the United States,
the European Commission, and the UN's International Narcotics Control Board worked in 1997 with
other states to establish an informal multilateral system of information exchange on chemicals.
Long Term Progress. The drug trade, while powerful, is far from omnipotent. It is vulnerable on many
fronts. It needs raw materials to produce drugs, complex logistic arrangements to move them to their
destination, cadres of professionals to run the technical and financial aspects of its operations, and some
means of making its profits legitimate. Above all, it needs the protection of a reliable core of corrupt
officials in all the countries along its distribution chain. Repeated attacks on every front, even if
seemingly insignificant by themselves, cumulatively are responsible for keeping the drug trade in check.
Viewed out of context, the many achievements of individual countries may seem insignificant. Many
never come to the attention of the press. The routine drug seizures, the jungle drug labs or airstrips
destroyed every day, the arrests of corrupt officials, or the improved performance of police and judicial
authorities benefiting from USG assistance receive at best only fragmentary coverage in world media.
Yet, as we have seen, cumulative effort and cooperation pay off. Ultimately it will be the sum of these
small steps that will allow us to make lasting gains at the drug trade's expense.
Controlling Supply. Since our mandate is to stem the flow of illegal drugs to the US, our success
depends on how effectively we attack drug supply beyond the country's borders. For the drugs that
threaten us most directlycocaine and heroinwe treat the process as a five-stage, grower-to-user chain
linking the drug producer abroad with the consumer in the United States. At one end is the farmer
growing coca or opium poppies in the Andes or Burma; at the other is the cocaine or heroin user in a US
town or city. In between lie the processing (drug refining), transit (shipping), and wholesale distribution
links. We cannot expect to reduce the flow of drugs to the United States significantly unless we strike as
close as possible to the source.
At each successive stage, the odds against stopping the flow increase markedly. Our international
counter-drug programs therefore target the first three links of the chain: cultivation, processing, and
transit. For drugs that are not completely synthetic, we stand our best chance if we can eliminate the first
stage, cultivation, altogether. When crops are destroyed or left unharvested, no drugs can enter the
system. It is akin to removing a malignant tumor before it can spread. Eradication is by far the most
cost-effective means, but large scale eradication may not be politically or socially feasible in many
countries. Moreover, by itself eradication is not a panacea. As our recent experience in Peru has shown,
the right combination of effective law enforcement actions and alternative development programs can
also produce remarkable results. The USG therefore has worked closely with the governments of the
coca growing countries to find the best way to eliminate illegal coca in any given national context.
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Coca Reduction. The coca crop offers the best prospect for dramatic reductions. Currently, significant
coca cultivation takes place in only three countries-Peru, Bolivia, and Colombia. Current studies
indicate that in Bolivia and Peru, where alkaloid content is high, every 200 hectares of coca eradicated
deprives the drug trade on average of a metric ton of refined cocaine. (The ratio is higher for Colombia,
where alkaloid content has traditionally been lower, though there are indications that yields may have
increased considerably in recent years.) Unlike a load of finished cocaine distributed among trucks,
boats, and aircraft, a coca field is a large, stationary target. So even manual eradication can make a
difference. But we have better means available, high-speed spray aircraft. If permitted to do so, these
planes could destroy a large percentage of the coca crop in a matter of months using environmentally
safe herbicides. Since it takes between eighteen months and two years for a coca bush to become fully
productive, intensive aerial spraying campaigns could create serious cocaine shortages, at least for two
years.
Political and economic conditions in some countries make eradication impractical. The USG has
therefore concentrated on working with each Andean government to find the best way to eliminate
illegal coca in the light of prevailing local conditions. Though all three Andean governments agree in
principle that coca cultivation must be reduced, only Colombia permits aerial eradication. Bolivia, where
some coca is reserved for traditional uses (e.g., chewing), will only allow manual eradication, a process
that is slow as well as dangerous to eradication personnel. Peru, until this year the largest cultivator, has
been ambivalent, because it also produces some coca leaf for traditional purposes. In the past, its
government would destroy seedbeds, but was not prepared to risk the political and economic
consequences of eradication without assured, long-term compensation from abroad for displaced
farmers. That situation, however, is changing.
The success of the "airbridge" denial in Peru has opened a new range of possibilities for crop control
beyond just eradication. It has shown that a crop control strategy combining interdiction, enforcement
and alternative development incentives can also be highly effective. It may even prove transferable to
other countries-provided that there is necessary patience, determination, and political will to carry out
close, sustained cooperation.
Political Will. The most powerful weapon in fighting the drug trade is an intangible: political will. A
first-class anti-drug force, equipped with state-of-the-art police and military hardware, cannot succeed
without the full commitment of the country's political leadership. Where political leaders have had the
courage to sacrifice short-term economic and political considerations in favor of the long-term national
interest, we have seen the drug trade weaken. And where they have succumbed to the lure of ready cash,
the drug syndicates have prospered accordingly.
Contrary to the image that the large drug syndicates cultivate, they are far from invincible. The
syndicates' prosperity hinges on establishing a modus vivendi with a weak or complacent government.
In exchange for the short-term benefits of large infusions of drug money into the economy (or into their
personal or political treasuries), corrupt government officials can limit counternarcotics operations to
those sectors least likely to harm trafficking interests. For example, the government of a major drug
cultivation country can focus on interdiction rather than eradication. In a major drug refining country
government forces may eradicate some crops while allowing drug syndicates to exploit corrupt
enforcement and timid judicial systems. In offshore financial centers, officials may launch antitrafficking campaigns, while promoting bank secrecy and lax incorporation laws that facilitate money
laundering. In every instance, the price of these short-term gains is the long-term entrenchment of drug
interests. Consequently, a basic objective of US antidrug policy is to prevent drug interests from
becoming entrenched by strengthening political will in the key source and transit countries. For where
political will is weak, corruption sets in, vitiates the rule of law, and puts democratic government at risk.
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Corruption. When we fight the drug trade we are also fighting political corruption. The drug trade feeds
upon the social, economic, and moral decay that corruption fuels. Drug syndicates wield a powerful
instrument for subverting even relatively strong societies: a money machine. Like modern-day Midases,
they transform an intrinsically cheap and available commodity (e.g., coca leaves) into an almost
inconceivably remunerative product. In terms of weight and availability, there is currently no
commodity more lucrative than drugs. They are relatively cheap to produce and offer enormous profit
margins that allow the drug trade to generate criminal revenues on a scale without historic precedent.
Assuming an average retail street price of one hundred dollars a gram, a metric ton of pure cocaine has a
retail value of $100 million on the streets of a US city-two or three times as much, if the drug is cut with
adulterants. By this measure, the 100 or so metric tons of cocaine that the USG typically seizes each
year are theoretically worth as much as $10 billion to the drug trademore than the gross domestic
product of many countries. Even if only a portion of these profits returns directly to the drug syndicates,
we are still speaking of hundreds of millions, if not billions, of dollars. To put these sums into
perspective, in FY 1998 the overseas component of the USG's budget for international drug control
operations is approximately one and a half billion dollars. In dollar terms, that equates to approximately
15 metric tons of cocaine; the Mexican drug cartels have lost that much in a shipment or two and barely
felt the loss.
Such inordinate wealth gives the large trafficking organizations an almost unlimited capacity to corrupt.
In many ways, they are a less obvious threat to democratic government than many insurgent movements.
Guerrilla armies or terrorist organizations openly seek to topple and replace governments through overt
violence. The drug syndicates only want to manipulate governments to their advantage and guarantee
themselves a secure operating environment. They do so by co-opting key officials. A real fear of
democratic leaders should be that one day the drug trade might take de facto control of a country by
putting a majority of elected officials, including the president, directly or indirectly on its payroll.
Though it has yet to happen, there have been some disquieting near-misses. By keeping the focus on
eliminating corruption, we can prevent the specter of a government manipulated by drug lords from
becoming a reality.
A Weapon Against Corruption. Drug corruption relies on the low visibility of its operations. Since it
shuns the light, the best way to attack drug corruption is to expose it regularly to public scrutiny. The
drug certification process is one way of attacking such corruption. It gives the US government the
legislative equivalent of an international spotlight to shine on corruption. Section 490 of the Foreign
Assistance Act requires the President to certify annually that each major drug producing or transit
country has cooperated fully or has taken adequate steps on its own to meet the goals and objectives of
the 1988 UN Convention, including rooting out public corruption. Governments that do not meet the
standard lose eligibility for most forms of US military and development assistance; they also face a
mandatory "no" vote by the USG on loans in six multilateral development banks.
Controversial, But Effective. The certification process has proved to be an unusually effective, if
controversial, instrument of public diplomacy. In contrast to the confidentiality inherent in traditional
bilateral diplomacy, public diplomacy stresses openness and transparency. By now, most governments
are aware that US law requires the President to provide an annual assessment of counternarcotics
cooperation based on objective information. By regular and sustained collaboration throughout the year,
we work with most of the governments concerned to establish realistic, mutually acceptable goals for
certification evaluation purposes. The value of the drug certification process is that every government
concerned is publicly accountable for its actions, including the United States. While the USG obviously
cannot certify itself, most governments recognize that the President of the United States cannot make
such an important public declaration without being certain of-and accountable for-his facts. Thus in the
certification process, the United States is opening itself up to the same public scrutiny by the
international community. This is a healthy process. The purpose of the law is not to punish; it is to hold
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all countries to a minimum acceptable international standard of cooperation, either by meeting the goals
and objectives of the 1988 UN Drug Convention in cooperation with the US or through their own
efforts. We know that some governments face greater obstacles than others and we take that into
account. We do not ask any country to do more than we are asking of ourselves.
Next Steps
The results suggest that we are on the right path. In the year ahead, we will build upon our gains by
pressing the drug trade at every point-targeting drug syndicates, reducing drug cultivation, destroying
labs, disrupting the flow of the necessary processing chemicals, interdicting large drug shipments; and
attacking drug money flows. Though we cannot neglect any stage in the process, we know that we can
inflict the most lasting damage at the crop cultivation and financial operations stages. We have seen this
year how cooperative ventures can pay off in reducing drug crop cultivation and we will strengthen
these programs. Now we need to beef up our collective efforts to obtain comparable gains against the
illegal drug conglomerates' financial operations.
The drug trade's capacity for generating vast amounts of cash is both its strength and its weakness. It
needs a steady flow of drugs to generate the money the drug syndicates require to stay in business, and it
needs the steady flow of money to buy the drug. Since the drug trade, like a legitimate enterprise,
partially finances future growth by borrowing against future earnings, every metric ton of drugs that
does not make it to market represents a potential loss of tens of millions of dollars in essential revenue.
On the revenue end of the process, cash proceeds are useless unless they can be reinvested in new drug
crops, arms, bribes, etc. to keep the syndicates solvent. Choke off either the drugs or the money long
enough, and the drug trade will suffer.
Our primary line of attack against domestic and international money laundering is to deny money
launderers access to legitimate financial systems. Though drug syndicates are powerful in their own
milieu, they lose their advantage when they have to operate in the legitimate world. Drug trafficking
organizations generate their profits in cash-enormous amounts of cash. To be useful, that cash must at
one time or another pass through legitimate international banking or commercial channels. The very
magnitude of the sums that make drug trafficking so profitable, however, makes the profits difficult to
conceal from vigilant banking systems. Therefore, when criminal enterprises surface to bank their
profits, they make themselves vulnerable to law enforcement actions.
Since our own strong financial system is often a target for money laundering, the USG is working hard
at home and abroad to prevent easy access directly into our banking and depository institutions. Other
governments in increasing numbers are taking similar measures. While collectively we have made
considerable progress, there are still nations that have not adequately addressed the need to take decisive
action on this problem. Until they do, drug trafficking organizations will continue to take full advantage
of these weak points to move their illicit money though legitimate financial channels.
We will work closely with other governments and encourage them to strengthen their oversight
mechanisms, tighten regulations, and strictly enforce money laundering laws. We will also work with
them to develop means of quickly identifying, freezing, and ultimately, forfeiting illegal drug proceeds
before they can be invested. In our own case, we will continue to make full use of the International
Economic Emergency Powers Act to prevent the drug trade and other branches of international
organized crime from exploiting legitimate companies for criminal purposes.
The international antidrug effort has too much at stake to give up any of the precious gains we have
made in the past few years. As one of the countries most affected by illegal drugs, the United States will
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continue to provide leadership and assistance to its partners in the global antidrug effort. We certainly
have an important role to play. Yet ultimately the success of this effort will hinge not on us alone, but on
the actions, commitment, and cooperation of the other major drug-affected governments. We will help
where we can, but only they can muster the necessary political will to shield their national sovereignty
from drug corruption by reforming and strengthening their anti-drug legislation, as well as their judicial,
law enforcement, and banking institutions. In democracies, the drug trade flourishes only when it can
divide the population and corrupt institutions. It cannot withstand a concerted, sustained attack by a
coalition of nations individually committed to its annihilation. It is that coalition we are working to
build.
Coca and Cocaine
Cocaine remains our most serious drug threat. Although surveys show a dramatic drop in cocaine use in
the last decade-from 5.7 million users in 1985 to 1.7 million in 1992-another potential wave of addiction
is never far away. Crack, the smokable variety of cocaine, is still one of the most immediately addictive
drugs known. It is an euphoric stimulant that often provokes violent behavior in users. For the drug
trade, it is an ideal drug: it is cheap, potent, addictive, widely available, and immensely profitable. Crack
feeds much of the drug violence in America's largest cities, where gangs compete for lucrative sales
territory while addicts steal to feed their habit. Hundreds of tons of cocaine enter the US every year by
land, air, and sea, despite stringent USG control measures. Even the 200 metric tons or so of cocaine that
the USG and its Western Hemisphere partners typically seize in a year have little discernible effect on
price or availability. The combination of strong demand and extraordinary profits continue to make the
United States the cocaine syndicates' foremost market.
But we may be losing that questionable distinction; Europe is catching up. This change is part of a trend
we started observing a few years ago when the Colombian syndicates actively began promoting cocaine
to a Europe-wide clientele. Although cocaine must compete with cheaper methamphetamine both in the
US and Europe for its share of the market for addictive stimulants, in parts of Europe and Russia,
cocaine use is on the rise. It now has the meretricious glamour it enjoyed in the United States in the
1980's, when it was the favorite of Wall Street overachievers, star athletes, and entertainment celebrities.
The "gold rush" atmosphere of the post-Soviet era creates ideal conditions for cocaine use among risktaking "high rollers," particularly when organized crime makes commerce in the drug relatively easy.
The incentives are certainly there: with reports of cocaine selling at up to $300 dollars per gram in
Russia, it is no wonder that the Colombian syndicates have spent considerable efforts to set up overseas
branches in Europe. The level of seizures is a sign that large volumes of cocaine are now available in
Western Europe.
Cocaine is now truly cosmopolitan. It can be found on every continent. For example, Nigerian
organizations use air links from Brazil to African capitals to move large amounts of cocaine both for
consumption in Africa and transshipment to Europe. Almost every African country now can report
cocaine seizures, with Ghana and South Africa serving as important junctions for cocaine transiting
Africa.
Source and Transit Country Highlights. We worked closely throughout 1997 with the governments of
countries that have a role in cocaine flows to the United States. The most dramatic success, as we noted
earlier, was the drop in Peru's coca crop. With only 68,800 hectares of coca estimated at the end of
1997, the crop was at its lowest point since 1986. This decline represents a remarkable degree of
cooperation between the governments of Peru and the United States. Given the high yield of Peruvian
coca, that drop deprived the drug trade-in particular the Colombian syndicates-of the equivalent of 110
metric tons of potential cocaine. The good news in Peru was partially offset by the 18 percent increase in
Colombia's coca crop. For the past few years, the Colombian drug trade has been moving to consolidate
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and control all phases of the cocaine industry up to the moment the finished product can be delivered to
the Mexican cartels for final distribution. The successful disruption of the "airbridge" may only have
accelerated the move toward vertical integration of the industry.
The increase in Colombian coca adds both urgency and risk to US-Colombian eradication efforts. The
cocaine syndicates are protecting these new fields with tighter security measures, including better
weaponry for shooting down aircraft. This year the Thrush and OV-10 spray aircraft took frequent hits
from small arms fire. The increased threat has brought about changes in tactics and in herbicide mixes to
make eradication more effective without endangering personnel or the environment. Since the
Colombian drug trade has been relocating coca fields to the southwestern provinces of Caqueta and
Putumayo, areas of heavy guerrilla influence, antidrug tactics will have to be adjusted accordingly. In
eradication sorties last year, spray aircraft destroyed 19,265 hectares. Bolivia, which only permits
manual destruction of coca, reached its gross eradication goal of 7,000 hectares by the end of year.
Although there was some new planting, at the end of the year there were an estimated 45,800 hectares
under cultivation, a five percent drop from 1996. This decline, while small, continues to move Bolivia
gradually toward the government's avowed goal of ridding the country of all illicit coca by the year
2002.
Drug seizures were up in many countries. In Colombia, the 44 metric tons of cocaine products seized
were nearly double the 1996 figure. With 15.6 metric tons of cocaine HCl seized in 1997, Venezuela
more than doubled its 1996 total of six metric tons. Bolivia seized over ten metric tons of cocaine base
and HCl, while in the first six months of 1997, Argentina had seized 3.5 metric tons of cocaine HCl
versus 2.3 metric tons in all of 1996.
Central American governments maintained active interdiction programs in 1997. In operations that
suggest more cocaine is moving through Central America, Costa Rica seized just slightly less than
eight metric tons of cocaine, more than the combined total of the previous seven years' seizures. In the
first ten months of the year, Panama seized nearly eight metric tons of cocaine, as much as during the
whole of the previous year, while Honduras by November had captured 2.3 metric tons of cocaine, five
times the amount seized two years earlier. It is likely that most of the cocaine crossing through Central
America was heading to the United States via Mexico.
Mexico now rivals Colombia as the center of the Western Hemisphere drug trade. Mexican drug
syndicates have divided up the territory with the Colombian organizations, gradually assuming
responsibility for the wholesale distribution of most of the cocaine moving to the United States.
Mexican authorities inflicted some damage on the major cartels by arresting Oscar Malherbe de Leon,
Operations Manager of the Gulf Cartel and several other important figures. In 1997, the government
improved its conviction rate so that fewer traffickers were able to secure their releases by Mexican
courts. Among those convicted was Hector ("El Guero") Palma Salazar, who had regularly succeeded in
getting charges against him dismissed since his 1995 arrest. His appeal was rejected and he was
sentenced to 19 and a half years in prison. Among other accomplishments, Mexican law enforcement
agencies seized 34.4 metric tons of cocaine in 1997, a 45 percent increase over 1996.
There was evidence that the drug syndicates moved greater amounts of cocaine through the Caribbean,
as interdiction operations in Central America and Mexico intensified. Seizures rose significantly in The
Bahamas. Haiti's Coast Guard, funded largely by US assistance and working in cooperation with the
US Coast Guard, seized 2.2 metric tons of cocaine. This represents a marked increase in seizures in
previous years by Haitian authorities. The US Coast Guard reported the most dramatic rise in seizures in
the waters around Puerto Rico.
Heroin and Opiates
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Heroin, once discredited as the drug of "dead-end" addicts, has been creeping back onto the US drug
scene. Used by itself, it can provide a mellow euphoria; taken along with cocaine, it can moderate
cocaine's stimulant effects. Though just as deadly as cocaine, heroin, as an opiate, may be even more
addictive. It has a special property that appeals to trafficker and addict alike: it allows many addicts to
develop a long-term tolerance to the drug. While regular cocaine use may destroy an addict in five years,
a heroin addiction can last a decade or more. Some prominent heroin addicts have been known to
preserve the facade of a normal life for much of their lives. As long as addicts have access to a
maintenance "fix," they can function. Some can even appear to function normally.
Heroin may be acquiring an upscale image in a new generation of potential users, ignorant of its
devastating consequences. Gone are the days of the archetypal junkie shooting up heroin with a dirty
needle. Today's high purity Colombian heroin can be sniffed like cocaine, sparing the user from both the
need for syringes and the fear of contracting AIDS from infected needles. Estimates of the US heroin
addict population, which for two decades had remained steady at 500,000 individuals, are being revised
upwards; some experts believe it could be double that number. Evidence of combined drug use suggests
that growing numbers of the US's 1.7 million cocaine addicts are using heroin to cushion the "crash" that
follows the "rush" of using crack.
Heroin is the reigning hard drug of choice in much of the world. And there is no dearth of the drug,
since opium poppies can grow in almost any country. According to USG estimates, potential world-wide
opium production crossed the 4,000 metric ton threshold in 1995 and has stayed there since. The USG
estimates for 1997 place potential opium gum production at nearly 4,100 metric tons, potentially
yielding over 410 metric tons of heroin. Roughly 60 percent of that grows in Burma, which by itself
probably could satisfy world heroin demand. A bumper crop in Afghanistan in 1997 bolstered
Southwest Asian production, bad news for Europe, which gets most of its heroin from the region.
Heroin trafficking, availability, and addiction continue to grow unchecked throughout most of the world.
Despite active enforcement programs in transit countries, high-quality Afghan heroin continues to move
in large quantities along the Balkan Route's northern, central, and southern branches into every
important market in Europe, Russia, and the other countries of the former Soviet Union. From the size
of seizures, it appears that larger and larger amounts are entering the pipeline. In January 1998, Turkish
authorities seized 480 kg of pure heroin in one shipment crossing from Azerbaijan, and that was only
one of many large shipments intercepted. By comparison, the USG largest heroin seizure was 490 kg in
1991. Yet even losing these large shipments scarcely causes a hiccup in the traffickers' operations. With
heroin demand seemingly open-ended and heroin availability unlikely to be seriously diminished, we
can expect to see a continuing flow of the drug to nearly every country on the globe.
Source and Transit Country Highlights. Opium poppy cultivation marginally decreased in 1997 in
Southeast Asia's Golden Triangle region, the world's opium-rich area. Total cultivation fell three
percent from 190,520 hectares in 1996 to 184,950 hectares in 1997. As the bread-basket of the opium
trade, Burma accounts for over 60 percent of world's opium poppy cultivation and opium gum
production. Estimated production in Burma dropped by eight percent in 1997, for an estimated total of
2,365 metric tons, enough to produce 236 metric tons of heroin, probably more than enough to satisfy
the world's heroin needs. Production in Laos increased by five percent, for an estimated total of 2l0
metric tons, or about nine percent of the Southeast Asian total. Already minimal production in
Thailand, however, plummeted by seventeen percent in 1997. Thailand now accounts for only about
one percent of Southeast Asian production. In Vietnam, the USG identified substantial new growth that
nearly doubles our estimate of the country's opium poppy cultivation. By the end of 1997, there were
6,150 hectares under cultivation potentially yielding 45 metric tons of opium gum, compared to the 1996
totals of 3,150 hectares of opium poppy, potentially capable of yielding 25 metric tons of opium gum.
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Opium poppy cultivation rose by five percent in Southwest Asia, after a nine percent drop the year
before. Afghanistan remained the world's second largest opium producer in 1997, as poppy cultivation
increased three percent to 39,150 hectares from 37,950 hectares the year before. As the main source of
the heroin consumed in Europe, Afghanistan is in a key position to affect heroin supplies throughout the
continent. Opium poppy is currently Afghanistan 's leading cash crop and the Taliban faction control an
estimated 95 percent of the areas in which it is grown. In addition there are reports that the Taliban raise
revenues by taxing opium production as part of their general agricultural tax.
Pakistan's opium poppy cultivation in 1997 rose by 21 percent to 4,100 hectares, despite broadened
crop cultivation bans and assistance from the US and other donors. Estimated potential opium yield is 85
metric tons, up 13 percent from 1996. Based on available information, Pakistan failed to arrest or
convict any major traffickers in 1997. Of the 23 persons whose narcotics-related extradition the US had
requested, one was arrested and none were extradited during the year. The case of a Pakistani DEA
employee arrested in April severely strained narcotics enforcement cooperation between the US and
Pakistan. The employee, convicted of entrapping a Pakistani Air Force officer involved in smuggling
heroin to the US, played a key role in helping DEA identify the drug smuggler.
Southwest Asian heroin continues to pour into Europe along the Balkan Route. With the branching of
the route-northwards to Romania, Hungary, and the Czech and Slovak Republics; southwards through
Croatia, Slovenia, the Former Yugoslav Republic of Macedonia, Greece and Albania-each of these
countries now faces important domestic drug problems. Turkish trafficking groups, with distributors in
ethnic enclaves in nearly all major European cities, control much of the Balkan Route heroin trade.
Russia is playing an increasingly pivotal role in drug trafficking in Europe and Central Asia. Criminal
organizations that had successfully functioned under the Soviet regime entered the post-Cold War era
with the necessary expertise, contacts, smuggling, and distribution networks already in place. Using
heroin sources established originally during the Soviet Union's war with Afghanistan, ethnically based
gangs-many from the Caucasus-have blossomed into major players in the European drug trade. They can
use their networks to move Southwest Asian heroin through Central Asia to Russia and then onto
destinations in the Baltics and Western Europe. Russian authorities noting a rampant increase in
domestic drug use believe that there are now over 2 million drug users in Russia, with the numbers
growing every year.
The Central Asian countries of Kazakstan, Kyrgyzstan, Tajikistan, and Uzbekistan, formerly
important poppy growing regions for the Soviet Union are well placed to be conduits for much of this
drug traffic. Kazakstan provides a bridge for Southeast Asian heroin to move to Europe and Russia from
Asia. The other countries offer profitable access routes for Southwest Asian, primarily Afghan, heroin
into Russia, the NIS and Europe. Heroin, which can fetch high prices in Russia and Europe, has been a
tempting source of cash to finance the civil wars in Afghanistan and Tajikistan.
Nigeria has become pivotal to the heroin trade. Because of its size, geographical location, and political
turbulence, Nigeria is Africa's most prominent transshipment point. Nigerians are all but ubiquitous in
the heroin trade. They surface on virtually every continent. Although they are among the principal
smugglers of heroin into the United States, Nigerians are frequently arrested in Bangkok, Rio de Janeiro,
New York, Moscow, Riyadh, Mumbai (Bombay), etc. Unfortunately, endemic, rampant corruption at all
levels of government in Nigeria virtually assures Nigerian trafficking organizations will continue to
operate at will.
Colombia is the Western Hemisphere's largest grower of opium poppies, though it represents less than
two percent world production. Increasing quantities of high purity Colombian heroin are entering the
United States, distributed by organizations formerly devoted to cocaine smuggling. For 1997, USG
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estimates showed Colombian opium poppy cultivation essentially steady at 6,600 hectares and capable
of yielding an estimated 66 metric tons of opium gum, or 6.3 tons of heroin, assuming no losses.
Venezuela's border with Colombia has made it a potential poppy growing country. So far, however,
USG-assisted eradication efforts have kept growth to insignificant levels. Over the past four years, the
eradication program has destroyed over 3,000 hectares of opium poppy in the Sierra de Perija region
along the Colombian border.
Mexico is Latin America's second largest cultivator of opium poppies. In Mexico, the 1997 crop was 22
percent smaller than the previous year's. After Mexican government eradication operations destroyed
8,000 hectares of poppy, there were 4,000 hectares available for exploitation by the drug syndicates,
with an estimated potential yield of 46 metric tons of opium gum, or 4.6 metric tons of heroin. Though
most of this heroin is destined for US markets, a USG-supported national drug use survey revealed a rise
in intravenous heroin use in Mexican cities along the northern border with the US.
International Organizations
International organizational efforts continue to be a key component of the overall US counternarcotics
strategy. Through multilateral organizations the United States has the opportunity to multiply
contributions from other donors and decrease the perception that drugs are exclusively a US problem.
The US participation in multilateral programs also supports indigenous capabilities in regions where the
US is unable to operate bilaterally for political or logistical reasons. Moreover, the US contributions to
UNDCP have had significant impact on the operations and expansion of UN counternarcotics programs
and policy. In 1997, Austria, Benin, Iceland, Kazakstan, Singapore, and Vietnam became parties to the
1988 UN Convention.
The United Nations International Narcotics Control Board (INCB) has continued to provide invaluable
support to initiatives to improve multilateral cooperation in chemical control. The INCB Secretariat
provided expert advice to the two 1997 MCRI meetings and strong support for the concept of the
initiative. It will have an important role in facilitating its implementation.
Chemical diversion training and technical assistance programs of the United Nations International Drug
Control Program (UNDCP) are providing valuable assistance to Bolivia and the countries of South and
Southwest Asia in establishing the legal and regulatory infrastructures required for chemical control and
training the personnel to implement them.
The InterAmerican Drug Abuse Control Commission (CICAD) of the Organization of American States
(OAS) has developed a program the "Monitoring System for the Control of Precursors and Other
Chemical Substances Used in the Production of Illicit Drugs" to assist countries in their implementation
of national chemical control laws and regulations. Using mathematical models, the system can estimate
the quantities of these chemicals that are required for domestic industrial use and, beyond these
quantities, what portion of the excess is liable for diversion to the production of illicit drugs. The system
has been used in one OAS Member State to positive reviews and will be used in others in the future.
Demand Reduction
Drug "demand reduction" refers to efforts to reduce worldwide use and abuse of, and demand for
narcotic drugs and psychotropic substances. The need for demand reduction is obvious, since escalating
drug use and abuse continue to take a devastating toll on the health, welfare, safety, security, and
economic stability of all nations. Changing patterns of drug abuse, supply, and distribution compound
the problem, at the same time as international drug syndicates and gangs are carrying out ever more
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ruthless, vigorous, and sophisticated marketing techniques and strategies. Our response has been a
comprehensive, balanced, and coordinated approach in which supply control and demand reduction
reinforce each other.
Our demand reduction strategy integrates a broad spectrum of initiatives. These include efforts to
prevent the onset of use, intervention at "critical decision points" in the lives of vulnerable populations
to prevent both first use and further use, and effective treatment programs for the afflicted and addicted.
Other aspects encompass education and media campaigns to increase public awareness of the deleterious
consequences of drug use/abuse and community coalition-building. Coalitions are necessary in order to
mobilize public and private social institutions, the faith community, and law enforcement entities in
targeted campaigns against drugs. The strategy also provides for evaluations of the effectiveness of these
efforts and for research studies to find better ways of reducing demand.
In 1997, INL's efforts focused on preparation for the United States-Mexico Demand Reduction
Conference, to be held in El Paso, Texas on March 19 and 20, 1998, and on forging regional and
demand reduction coalitions in Latin America and Southeast Asia.
Chemical Control
The USG continued in 1997 to pursue informal and formal mechanisms to promote the information
exchange necessary for chemical control, to support training and technical assistance programs to
encourage and enable governments to establish national chemical control regimes, and to improve
chemical diversion investigation cooperation with key chemical source and drug manufacturing
countries.
The information exchange efforts are concentrated on the major chemical source countries, since
stopping suspect shipments before they leave the exporting state is the best way to prevent subsequent
diversion. Training and assistance is going to those who most need it, including drugproducing countries
where diversion is occurring.
Multilateral Chemical Reporting Initiative (MCRI). Informal mechanisms have proven the best
vehicle for the information exchange required for effective chemical control. Formal bilateral
agreements normally cover only trade between the parties and frequently preclude information exchange
beyond the parties. Informal mechanisms allow participation by more governments, to the extent that
they are able and willing.
The MCRI is a USG initiative to promote that participation. It was launched in two 1997 meetings, cohosted by DEA and the European Commission, and attended by officials of the most important chemical
source countries. The objectives of the meetings were to gain agreement that information can be
exchanged between enforcement and regulatory agencies on a voluntary, informal basis; that this is the
best way to achieve the widespread participation effective international chemical control requires; and
that exchanges in this manner will not jeopardize commercial confidentiality. The final objective of the
meetings was to develop common procedures for the information exchange.
The outcome of the 1997 meetings was a strong consensus in support of the MCRI concept, but
lingering concerns were voiced by some countries over the need for formal instruments to govern
information exchange. Generally, countries in which chemical control is considered a law enforcement
issue, and administered by law enforcement agencies, have been most supportive. Countries where
chemical control is considered a regulatory issue, and administered by trade and commerce agencies,
have been more cautious.
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In 1998, DEA will be implementing the MCRI by providing and requesting information from meeting
participants, and inviting them to cooperate to the extent their national law enforcement and commercial
practices permit. We expect momentum to pick up as the valuable contribution of the system to the
effective implementation of national chemical control regimes, and its ability to maintain the
confidentiality of information exchanged solely for the purpose of enforcing national chemical control
laws, are demonstrated.
US/EU Chemical Control Agreement. Chemical control within the European Union is a "Community"
matter governed by two European Council regulations which Member States enforce through national
laws and regulations. This provides a uniformity of chemical control procedures and made it
advantageous for the USG to negotiate a formal chemical control agreement with the European Union
that would facilitate chemical control cooperation with all Member States.
The agreement was signed on May 28, 1997. In the negotiations, we were able to agree on the key point
that our joint chemical control problem is not diversion from trade between the US and EU Member
States, but rather from our chemical trade with third countries. Therefore, the US/EU agreement
contains important provisions for the sharing of information on proposed transactions with third
countries to verify their legitimacy.
The agreement established a "Joint Follow-up Group" which met for the first time in Brussels in
November 1997. At this meeting practical procedures were established for implementing the agreement.
The second Follow-up Group meeting is scheduled for June 1998 in Washington to review and refine
these procedures based on the experience that has been gained in their implementation.
Money Laundering and Financial Crimes
There were a number of positive developments in the money laundering arena in 1997 that have
strengthened the global fight against the laundering of drug proceeds and the proceeds from organized
criminal activity:
The Financial Action Task Force (FATF) continued to foster implementation of anti-money laundering
measures worldwide. Perhaps the greatest achievement during 1997 was that all FATF member nations
now have anti-money laundering legislation that comports with the FATF 40 Recommendations. The
second round of mutual evaluations of member nations' progress in effectively implementing the
Recommendations continued. During 1997, the FATF began discussion of its future, including possible
expansion of its membership.
The Asia/Pacific Group on Money Laundering (APG), a new regional anti-money laundering body, was
formally established in February 1997 at the Fourth Asia/Pacific Money Laundering Symposium. The
first APG working party meeting, in July 1997, resulted in the development of a strategy for a work
program and statement of principles for the organization. The APG has recognized in principle the
FATF 40 Recommendations as the international standard.
The Caribbean Financial Action Task Force (CFATF) advanced its anti-money laundering agenda.
During 1997, Venezuela, Jamaica, and Dominica subscribed to the CFATF Memorandum of
Understanding, increasing CFATF's membership to 24 jurisdictions. CFATF initiated a five-phase
typologies exercise to identify money laundering methods, trends and patterns, and to develop effective
countermeasures. In July 1997, CFATF and FinCEN co-sponsored a Casino Regulatory Conference as
phase two of the exercise, following a similar exercise focused on domestic financial institutions held
earlier in the year.
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During the past year, governments around the world increasingly have recognized the important role
played by financial intelligence units (FIUs), both on the domestic and international levels. By
definition, FIUs serve as a central point for the receipt, and as permitted, analysis and dissemination to
competent authorities of suspicious activity report information. In many countries that have such units,
they serve as a central coordinating point for information on money laundering and other financial
crimes and thus facilitate the conduct of national investigations. In addition, FIUs serve to assist in the
international exchange of financial intelligence that is often so critical to stopping money laundering on
a global scale. Further to this evolution has been the growing visibility and recognition of the Egmont
Group of FIUs. This unofficial organization of such agencies has grown from 14 just two years ago to
28 FIUs in 1997. This year's meeting of the Group resulted in the release of a Statement of Purpose for
the organization that emphasizes the key roles FIUs play in national anti-money laundering programs
and articulates the complementary role they can have in the exchange of financial information. To
facilitate this exchange, the Group developed and implemented a "virtual private network" or web site
that permits FIUs to communicate and exchange information securely over the Internet.
The United States continued to implement the Presidential Decision Directive announced in October
1995. Money laundering centers that have important implications for US national security and with
whom expanded cooperation would significantly strengthen global anti-money laundering efforts have
continued to work with US officials in an effort to increase bilateral and multilateral cooperation and to
receive more targeted assistance and training.
The United States, through the Department of State's Bureau of International Narcotics and Law
Enforcement Affairs (INL), continued to develop and support multi-agency programs for providing law
enforcement, rule of law, and central bank training and assistance to a variety of countries, including
emerging democracies. During 1997, INL developed and supported numerous anti-money laundering
training sessions, money laundering assessments, and a variety of technical assistance missions
throughout the world as part of a $36.2 million initiative. In addition, the US continues to focus on the
success of the multi-agency approach by bringing together, where possible, law enforcement, judicial,
and bank supervisory authorities in order to provide a complete and integrated anti-money laundering
program.
In connection with drug money laundering countermeasures, two joint US Justice and Treasury
Department national financial sector conferences were held in 1997 involving 21 districts and over 350
anti-money laundering law enforcement and regulatory officials. These conferences brought together the
principal anti-money laundering investigators, prosecutors and regulators nationwide to familiarize them
with new and evolving money laundering techniques, as well as with international developments. They
specifically focused attention on certain financial sectors, such as money remitters, trade and businesses,
and bulk cash shipping.
In 1997, the United States successfully employed a legal provision in the Bank Secrecy Act to impose
stricter reporting requirements in order to reduce Colombian drug cartels' suspected use of certain
money transmitters to repatriate proceeds of narcotics sales. Working closely with a multi-agency task
force and federal prosecutors in the New York City area, the Treasury Department issued a
Geographical Targeting Order (GTO) requiring New York area transmitters to report, for a limited
period of time, certain information about the senders and recipients of all remittances to Colombia of
$750 or more. The New York GTO caused an immediate and dramatic reduction in the flow of narcotics
proceeds to Colombia through New York City money transmitters. US law enforcement observed a
marked increase in interdiction and seizure activity of cash at east coast US border areas. The GTO also
had a significant impact on money laundering activity among the targeted transmitters. Several
transmitters stopped sending funds to Colombia or went out of business.
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Also in August 1997, the United States issued two GTOs requiring certain money transmitters in Puerto
Rico and the New York City area to report all money transfers of $750 or more to the Dominican
Republic. Large and unbalanced currency flows to the Dominican Republic led the United States to
scrutinize the transfers and issue the GTOs. The money remittance business had dramatically expanded
to meet the needs of the large Dominican expatriate community which sends substantial amounts of
funds home, but law enforcement was concerned that this expansion also reflected an abuse of the
industry by narcotics traffickers. Initial reports indicate that the Dominican Republic GTOs have
dramatically reduced the volume of cash remittances from Puerto Rico to the Dominican Republic.
Methodology For Estimating Illegal Drug Production
How Much Do We Know? This report contains tables showing a variety of illicit narcoticsrelated data.
These numbers represent the USG's best effort to sketch the dimensions of the international drug
problem at this time, but the picture is not as precise as we would like it to be. The numbers range from
cultivation figures, relatively hard data derived by proven means, to crop production and drug yield
estimates, figures that become softer as more variables come into play. We publish these numbers with
an important caveat: the yield figures are potential, not final numbers. Although they are useful for
determining trends, they are ultimately approximations.
Each year, as we get better data through field research, we revise our estimates. This kind of field
research is far from easy, since the secretive and violent nature of the illegal drug trade makes it difficult
to develop precise information. This is particularly relevant given the tremendous geographic areas that
must be covered, and the difficulty of collecting reliable information in diverse and treacherous terrain.
What We Know With Reasonable Certainty. The most reliable information we have on illicit drugs is
how many hectares are under cultivation during any given year. For more than a decade, the USG has
estimated the extent of illicit cultivation in a dozen nations using proven statistical methods similar to
those used to estimate the size of licit crops at home and abroad. We can thus estimate the area under
cultivation with reasonable accuracy.
What We Know With Less Certainty. Where crop yields are concerned, the picture is less clear. How
much of a finished product a given area will produce is difficult to estimate. Small changes in such
factors as soil fertility, weather, farming techniques, and disease can produce widely varying results
from year to year and place to place. In addition, most illicit drug crop areas are not easily accessible to
the USG, making scientific information difficult to obtain. Again, we are estimating potential crop
available for harvest. Not all of these estimates allow for losses, which could represent up to a third or
more of a crop in some areas for some harvests. The value in estimating the size of the potential crop is
to provide a consistent basis for a comparative analysis from year to year.
Since cocaine remains at the top of the USG's drugcontrol priority list, we have gradually improved our
yield estimates. Our confidence in coca leaf yield estimates, as well as in the finished product, has risen
in the past few years, based upon the results of field studies conducted in Latin America. Six years ago,
after completing preliminary research, the USG for the first time began to make its own estimate of dry
coca leaf yields for Bolivia and Peru instead of relying solely on reports from the governments of those
countries. Additional research and field studies have helped refine these estimates and make similar
improvements possible in estimates of other drug crops. In all cases, multiplying average yields times
available hectarage indicates only the potential, not the actual final drug crop available for harvest.
Harvest Estimates. Estimating the quantities of coca leaf, opium gum, and cannabis actually harvested
and available for processing into finished narcotics remains a major challenge. While we are making
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progress, at this time we cannot accurately estimate this amount with precision for any illicit crop in any
nation.
While farmers naturally have strong incentives to maximize their harvests of what is almost always their
most profitable cash crop, the harvest depends upon the efficiency of farming practices and the wastage
caused by poor practices or difficult weather conditions during and after harvest. Up to a third or more
of a crop may be lost in some areas during harvests.
In addition, mature coca (three to six years old), is more productive than immature or aging coca.
Variations such as these can dramatically affect potential yield and production. Additional information
and analysis should allow us to make adjustments for these factors in the future. Similar deductions for
local consumption of unprocessed coca leaf and opium may be possible as well through the
accumulation of additional information and research.
Processing Estimates. The wide variation in processing efficiency achieved by traffickers complicates
the task of estimating the quantity of cocaine or heroin that could be refined from a crop. These
variations occur because of differences in the origin and quality of the raw material used, the technical
processing method employed, the size and sophistication of laboratories, the skill and experience of
local workers and chemists, and decisions made in response to enforcement pressures. (See Yield
Estimates below.)
Figures Will Change as Techniques and Data Quality Improve. Additional research will produce
revisions to USG estimates of potential drug production. This is typical of annualized figures for most
other areas of statistical tracking-whether it be the size of the US wheat crop, population figures, or the
unemployment rate-that must be revised year to year. For the present, however, these statistics represent
the state of the art. As new information becomes available and as the art improves, so will the precision
of the estimates.
Status of Potential Worldwide Production
In evaluating the figures below, one must bear in mind that they are theoretical. They represent estimates
of potential production-the amounts that the USG estimates could have been produced if, and only if, all
available crops were to be converted into finished drugs. Since these estimates make no allowance for
losses, actual production is probably lower than our estimates. The figures shown are mean points in a
statistical range.
Potential Opium Production. In Southeast Asia, estimated opium cultivation and production in the
Golden Triangle countries fell in 1997. According to USG estimates, in 1997, growers in Burma, Laos,
and Thailand cultivated an estimated 184,950 hectares of opium poppy, potentially producing 2,600
metric tons of opium. Burma's production accounts for 91 percent of this amount. There was a three
percent drop in estimated cultivation, and a nine percent decline in production, from the 1996 estimate
of 190,520 hectares of opium poppy, potentially yielding 2,790 metric tons of opium gum In Burma,
estimated opium poppy cultivation fell by some five percent to 155,150 hectares from the 163,100
hectares reported for 1996. Estimated yield fell to 2,365 metric tons of opium gum for 1997, an eight
percent drop from 2,560 metric tons in 1996. Weather conditions were largely responsible for the
decrease in the crop. In Laos, however, estimated cultivation increased significantly by 12 percent to
28,150 hectares from the 1996 figure of 25,250 hectares; estimated production rose by five percent to
210 metric tons from the 1996 figure of 200 metric tons. Estimated opium poppy cultivation in
Thailand fell dramatically by approximately 24 percent to 1,650 hectares from the 2,170 hectares
observed last year. Thailand had an estimated potential production of 25 metric tons-17 percent less than
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the 30 metric tons estimated in 1996. In 1997, the USG's second survey of Vietnam identified
significant new growth of 6,150 hectares of opium poppy cultivation yielding a potential 45 metric tons,
almost double the 3,150 hectares yielding an estimated 25 metric tons of opium located last year. The
USG did not conduct a survey in China's Yunnan Province in 1997.
Opium poppy cultivation in Southwest Asia increased by five percent in 1997. A 21 percent increase in
opium poppy cultivation in Pakistan accounted for the much of the rise. Total hectarage for
Afghanistan and Pakistan rose from 41,350 hectares in 1996 to 43,250 hectares in 1997. Total potential
production for both countries rose from 1,305 metric tons to 1,350 metric tons. Afghan hectarage rose
from 37,950 in 1996 to 39,150 hectares in 1997. The estimated yield rose by three percent from 1,230
metric tons in 1996 to 1,265 metric tons in 1997. Pakistan's hectarage increased from 3,400 hectares in
1996 to 4,100 hectares in 1997. Estimated yield rose 13 percent from 75 metric tons in 1996 to 85 metric
tons in 1997. India's illicit cultivation declined from 3,100 hectares of opium poppy in 1996, with a
potential yield of 47 metric tons of gum to 2,050 hectares potentially producing 30 metric tons of opium
in 1997. We have no firm data about poppy cultivation or opium production in Iran. The USG last
examined Iran's cultivation in 1992. At that time, we detected approximately 3,500 hectares of opium
poppy with a potential yield of 35 metric tons to 70 metric tons. There has been no new information
from USG sources in 1997.
The USG is still examining the illicit drug crop situation in Russia and the Central Asian countries
formerly part of the Soviet Union. While some of these countries may be able to produce significant
opium poppy harvests, the USG still lacks sufficient data to identify and measure all suspected
cultivation areas.
In the Western Hemisphere, the opium poppy growing countries have maintained active crop control
efforts despite continuing campaigns by criminal organizations to expand the areas under cultivation. In
Colombia, USG estimates showed Colombian opium poppy cultivation at 6,600 hectares, five percent
more than last year, enough to yield an estimated 66 metric tons of opium gum, or six tons of heroin,
assuming no losses. In Mexico, the 1997 crop was 22 percent smaller than the previous year's. After
Mexican government eradication operations destroyed 8,000 hectares of poppy, there were 4,000
hectares available for exploitation by the drug syndicates, with an estimated potential yield of 46 metric
tons of opium gum, or 4.6 metric tons of heroin. Guatemala's poppy cultivation remains at minimal
levels after government efforts.
Coca Cultivation. Worldwide coca cultivation dropped seven percent from last year's 209,700 hectares
to 194,100 hectares in 1997. The most dramatic success, as we noted earlier, was the drop in Peru's coca
crop. With only 68,800 hectares of coca estimated at the end of 1997, the crop was at its lowest point
since 1986. Despite an active eradication program, Colombia experienced an increase in coca
cultivation to 79,500 hectares at the end of 1997. This was an 18 percent increase over the 1996 total of
67,200 hectares. In Bolivia, government forces eradicated 7,000 hectares, leaving 45,800 hectares under
cultivation. This is a five percent decrease from 1996's estimate of 48,100 hectares. Some coca is
cultivated in inaccessible areas of Brazil, but its extent is unknown. Ecuador has only negligible
amounts of coca.
Cocaine Yield Estimates
The cocaine yield figure is offered with the same caveat as the crop harvest yield data: it is a figure
representing potential production. It is a theoretical number. It does not in every case allow for losses or
the many other variables that one would encounter in a "real world" conversion from plant to finished
drug. In fact, the amount of cocaine HCl actually produced is probably lower. A USG team that studied
cocaine processing in Bolivia's Chapare region in 1993 found that in the laboratories under observation
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processing efficiency was lower than previously thought. The estimate for Bolivia was reduced
accordingly and the figure published as a point estimate rather than as a range.
In 1997, taking into account estimates of local consumption and local seizures, the USG calculates that
if virtually every coca leaf were converted into cocaine HCl, and there were no losses because of
inefficiency, bad weather, disease, or the deterrent effects of law enforcement, 650 metric tons of
cocaine HCl theoretically could have been available from Colombia, Bolivia, and Peru for worldwide
export. This figure includes 325 metric tons potentially available from Peru, 200 metric tons potentially
available from Bolivia, and approximately 125 metric tons potentially available from Colombia. In
publishing these numbers, we repeat our caveat that these are theoretical numbers, useful for examining
trends. Though every year research moves us closer to a more precise cocaine yield estimate for Latin
America, we do not yet know for certain the actual amount available for distribution.
Consumption Data
Most of the chapters in this report contain some user or consumption data. For the most part, these are
estimates provided by foreign governments or informal estimates by USG agencies. There is no way to
vouch for their reliability. They are included because they are the only data available and give an
approximation of how governments view their own drug abuse problems. They should not be considered
as a source of data to develop any reliable consumption estimates.
Marijuana Production
Cannabis cultivation continued to decline in Mexico in 1997 to 4,800 hectares with a potential yield of
2,500 metric tons. This is a 68 percent drop from since 1992. Mexican law enforcement agencies
eradicated, 10,500 hectares of cannabis in 1997. In Colombia's traditional cannabis growing zones,
where intensive eradication in previous years had virtually destroyed the crop, there was a resurgence of
cultivation in 1993 to an estimated 5,000 hectares. That estimate did not change in 1997. Jamaica's
cannabis crop dropped to 317 hectares in 1997 from 527 hectares in 1996. The 1997 potential yield was
down 40 percent to 214 metric tons from 356 metric tons in 1996. We recognize that there may be
considerable undetected cannabis cultivation in Central and East Asia, and on the African continent,
though there is no evidence that any of this cannabis significantly affects the United States. As we gather
more accurate information, we will report significant findings in future INCSRs.
Worldwide Cultivation Totals [Excel file 29.2KB]
World Wide Production Totals [Excel file 15.1KB]
UN Convention Signatories [Excel file 30.2KB]
INL FY 99 Budget Request by Country [Excel file 22.5KB]
INL Budget Summary by Functional Activity [Excel file 19.2KB]
[end of document]
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Return to International Narcotics Control Strategy Report. This is an official U.S.Government source for information on the WWW. Inclusion of non-U.S. Government links does not
imply endorsement of contents.
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INTERNATIONAL NARCOTICS and
LAW ENFORCEMENT AFFAIRS
FY 1999 BUDGET REQUEST
($000)
FY1997
ACTUAL
--------------
FY1998
PLAN
-----------
FY1999
REQUEST
---------------
800
45,500
700
33,450
-600
2,000
650
5,000
25,750
--600
5,100
------------120,150
500
12,000
500
30,000
36,000
500
3,000
600
5,000
31,000
1,000
45,000
1,200
45,000
-1,500
4,000
800
8,000
50,000
600
4,000
------------123,700
700
9,000
------------166,200
2,500
2,500
3,230
500
0
320
--------9,050
3,500
1,500
2,000
500
0
1,200
--------8,700
4,000
2,500
3,000
500
0
3,000
--------13,000
31,500
-------------160,700
38,000
-------------170,400
41,000
-------------220,200
12,000
4,000
8,000
Law Enforcement Training and
Demand Reduction
9,000
9,000
8,000
Systems Support/Upgrades
C - 26 Support
Huey Upgrades - Colombia
Total Systems Support/Upgrades
3,500
--3,500
-4,000
14,000
18,000
10,000
--10,000
Program Dev. and Support
7,800
8,600
8,800
193,000
210,000
255,000
NARCOTICS PROGRAMS
Latin America
Bahamas
Bolivia
Brazil
Colombia
Blackhawks
Ecuador
Guatemala
Jamaica
Mexico
Peru
Law Enforcement
Alternative Development
Venezuela
Latin America Regional
Subtotal
Asia/Africa/Middle East Regional
Laos
Pakistan
Thailand
Turkey
NIS/EUR Regional
Asia/Africa/ME Regional
Subtotal
Interregional Aviation Support
Total Country Programs
International Organizations
TOTAL NARCOTICS PROGRAMS
INCSR 1998 Page 29
16,000
15,000
Int'l Narcotics Control Strategy Report, 1997 - Intl Training
Page 1 of 3
The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
This site is not updated so external links may no longer func
us with any questions about finding information.
NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
INTERNATIONAL TRAINING
International antinarcotics training is managed and funded by INL, and carried out by the DEA, US
Customs Service, and US Coast Guard. Major objectives are: contributing to the basic infrastructure for
carrying out counternarcotics law enforcement activities in countries which cooperate with and are
considered significant to US narcotics control efforts; improving technical skills of drug law
enforcement personnel in these countries; and increasing cooperation between US and foreign law
enforcement officials. Over 8,250 persons participated in the US Government's international narcotics
control training program in FY 1997, an increase of approximately 1,500 persons from FY 1996.
Included in this total were individuals trained by DEA using funding from the Department of Justice's
Asset Forfeiture Fund.
INL training continues to focus on encouraging foreign law enforcement agency selfsufficiency through
infrastructure development. The effectiveness of our counternarcotics efforts overseas should be viewed
in terms of what has been done to bring about the establishment of effective host country enforcement
institutions, thereby taking drugs out of circulation before they begin their journey toward the US. US
law enforcement personnel stationed overseas are increasingly coming to see their prime responsibility
as promoting the creation of host government systems which are compatible with and serve the same
broad goals as ours.
During FY 1997, law enforcement training continued to devote increased attention to the development
and support of infrastructure building in those countries which posed the greatest threat to the US as a
result of their role as source or transit countries for narcotics destined for the US. INL received positive
feedback both from US Embassies and foreign governments on the direct benefits gained from this
training, including the discovery of illegal narcotics as a result of techniques learned during a program.
INLfunded training will continue to support the major US and international strategies for combating
narcotics trafficking worldwide. Emphasis will be placed on contributing to the activities of international
organizations, such as the UNDCP and the OAS. Through the meetings of major donors, the Dublin
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Group, UNDCP and other international fora, we will coordinate with other providers of training, and
urge them to shoulder greater responsibility in providing training which serves their particular strategic
interests.
INL will maintain its role of coordinating the activities of US law enforcement agencies in response to
requests for assistance from US Embassies. This will avoid duplication of effort and ensure that
presentations represent the full range of US Government policies and procedures.
Training Statistics
Drug Enforcement Administration
Training in U.S.
Executive Observation Program
Special Observation Program
International Visitors Program
Forensic Chemist Seminar
Int'l Narcotics Enf. Mgt. Seminar
"Vetted" Training
Training in Host Countries:
InCountry Drug Enforcement Seminar
Advanced Drug Enforcement Seminar
Int'l Asset Forfeiture Seminar
Airport Operations
Methods of Instruction
Clan Lab Seminar
Subtotal
US Customs Service
Training in US:
INL International Visitor Program
International Visitor Program
Carrier Initiative Program/Business
Anti-Smuggling Coalition
Business AntiSmuggling Coalition
Training in Host Countries:
Overseas Enforcement Training
TraintheTrainer Workshop
Money Laundering Seminar
Carrier Initiative Program/Business
AntiSmuggling Coalition
Subtotal
Number of Participants
Number of Programs
21
106
1,170
20
25
232
165
34
162
1
1
5
633
156
123
170
43
104
2,803
19
5
3
5
1
3
244
9
799
2
157
705
52
456
76
1,394
15
6
14
1,098
6
4,537
252
US Coast Guard
Training in Host Countries:
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Maritime Law Enforcement
Port Security and Safety Course
Subtotal
Total INL Training FY 97
Page 3 of 3
793
133
926
34
4
38
8,266
534
Other US Assistance Provided
Section 489 (b)(2)(B) requires the INCSR submission to include a report specifying the assistance
provided by the United States to support international narcotics control efforts. In addition to the budget
for INL, which is provided in the Executive Summary, the report is also to include information on
assistance provided or to be provided by the Drug Enforcement Administration, the US Customs
Service, and the US Coast Guard to various countries, and information on any assistance provided or to
be provided by such governments to those agencies. This information has been prepared by the three
agencies and is provided in this section.
[end of document]
Return to International Narcotics Control Strategy Report. This is an official U.S.Government source for information on the WWW. Inclusion of non-U.S. Government links does not
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Int'l Narcotics Control Strategy Report, 1997 - Other USG Assist
Page 1 of 14
The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
This site is not updated so external links may no longer func
us with any questions about finding information.
NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
DRUG ENFORCEMENT ADMINISTRATION
The preeminent responsibility of the Drug Enforcement Administration (DEA) is to reduce and
ultimately minimize the impact posed by illicit drugs to our nation. All cocaine and heroin as well as
some marijuana and other dangerous drugs are produced outside the United States. These illicit drugs
are smuggled from countries of their source, usually through other countries to the US. Therefore, the
reduction of illicit drug availability in the US requires a strong international counternarcotics strategy. In
cooperation and coordination with other nations, as well as other US agencies, DEA strives to
concurrently suppress illicit drug production; disrupt the availability of these drugs in the distribution
chain; arrest and prosecute those involved in any aspect of illegal drug trafficking; and seize their profits
and assets.
The primary contribution of DEA in implementing our international counternarcotics strategy is
accomplished through the 70 offices that DEA maintains in 50 countries worldwide. The DEA overseas
mission is fivefold:
(1) Conduct bilateral investigative activities,
(2) Coordinate intelligence gathering,
(3) Engage in foreign liaison,
(4) Coordinate training programs for host country police agencies, and
(5) Assist in the development of host country drug law enforcement institutions.
In most countries where DEA maintains offices, DEA carries out all of the above functions with
emphasis determined on the basis of the conditions existing in each country. In some instances, where
the Host Nation's drug enforcement system is advanced, a DEA Country Office may limit its function to
selected activities instead of the full range of programs indicated above.
With the exception of DEA's training mission which is addressed elsewhere, the following are a few
examples of the assistance DEA provided host nation counterparts in furtherance of our mission during
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1997:
(1) Bilateral Investigations
DEA's Country Offices work with elements of the Host Nations (HN) Law Enforcement Agencies
(LEA) to investigate activities of drug traffickers that lead to indictments and prosecutions in either the
host country, the US or a third country. Whenever appropriate and feasible, intelligence information on
major traffickers operating in host countries is shared with HN LEAs to enhance their investigative
knowledge. Some examples of DEA's work with HN LEAs follow:
The DEA Mexico City Country Office played an instrumental role in the arrest and prosecution of Gulf
Cartel boss Juan Garcia-Abrego. The DEA assisted Mexican authorities in collecting much of the
evidence leading to Garcia's conviction in January 1997 in Texas. His conviction served as a significant
benchmark in improved bilateral investigations between the United States and Mexico.
In addition to the DEA's efforts concerning the Gulf Cartel, the DEA continued pursuing in conjunction
with Mexican authorities counternarcotics investigations targeting the Amado Carillo-Fuentes
organizations, the Arellano-Felix Brothers (AFO) , the Miguel Caro-Quintero Organization, and the
Amezcua Brothers. As a result of these joint investigations, the Mexican government seized $32 million
from Vicente Carillo-Fuentes, the present leader of the Amado Carillo-Fuentes organization. At the end
of fiscal year 1997, the Mexican government issued twelve warrants and seized over one-hundred
related properties of the Amezcua Brothers, the premier methamphetamine organization in North
America. The Mexican government turned-over custody of AFO assassin Jesus Alberto Bayardo-Robles
to the United States government after he agreed to cooperate and testify against the AFO.
The efforts of the DEA Bangkok, Thailand, Country Office resulted in the June 5, 1997, extradition of
DEA fugitive Li Yun Chung from Thailand to the United States. According to direct evidence and
intelligence information developed by the DEA, Li operated as an international heroin broker working
on-behalf of the Shan United Army. United States authorities indicted Li in connection with the
November 1996 seizure of 486 kilograms of heroin in Hayward, California (the largest domestic seizure
of heroin in US, history). The cooperative efforts of the governments of the United States, Thailand,
and Burma brought Li to justice.
The coordinated efforts of the DEA San Jose, Costa Rica, Country Office with other national and
neighboring countries' law enforcement agencies resulted in major arrests and seizures. During 1997,
Costa Rican police arrested 830 drug traffickers, including a major cocaine dispatcher, Jose Meza, as he
transited Costa Rica on a commercial flight. One case, which resulted in massive press coverage in
Costa Rica involved the February 27, 1997, arrest in Costa Rica of former Costa Rican congressman and
chairman of the Congressional Committee on Narcotics Trafficking and Corruption, Leonel VillalobosSalazar. Villalobos-Salazar was forced to resign from his political post due to his alleged ties to
traffickers. The arrests of Villalobos-Salazar and well-known female trafficker, Jeanette Loria,
developed through the coordinated efforts of the DEA and Drug Control Police agents. VillalobosSalazar and Ricardo Alem, another well-known trafficker, currently in custody in Miami, were attributed
with moving an excess of 3,000 kilograms of cocaine from Costa Rica to the US between 1993 and
1995.
In August 1997, the Costa Rican Drug Control Police, with assistance from DEA, targeted a CostaRican based heroin group headed by Juan Carlos Carpio-Aguilar. Authorities suspected Carpio-Aguilar
smuggled heroin from Panama into Costa Rica, for eventual re-export into New York. After expanding
the investigation into Panama, Panamanian police seized 5 kilograms of heroin and arrested two
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individuals. US law enforcement authorities arrested one courier and seized 1 kilogram of heroin in
Miami. In Costa Rica, authorities arrested Carpio and six others.
In concert with the American Embassy Country Team, the DEA Lima, Peru Country Office, assisted the
Peruvian National Police (PNP) in the gathering of intelligence and apprehension of the leaders of Peru's
three most important cocaine trafficking organizations. These "drug lords" manufactured and shipped
multi-ton quantities of cocaine base from Peru to Colombia on a monthly basis. On March 3, 1997,
based on one of these investigations, the Colombian National Police (CNP) located and captured
Peruvian national Carlos Cardenas Guzman. Following Guzman's arrest, the DEA assisted in the
apprehension of Cardenas's brother Luis Cardenas Guzman in Lima, Peru, on February 7, 1997. On
August 10, 1997, in another example of a successful joint investigation, the DEA aided the CNP and
PNP in apprehending Peruvian Waldo Simeon Vargas Arias.
During June 1997, the DEA Bern, Switzerland, Country Office played a significant role in a US
domestic cocaine and heroin investigation of Chicago based drug trafficker Rifat Fteja and his KosovoAlbanian drug trafficking organization. The Bern Country Office, based on intelligence received from
the DEA Chicago Field Division, developed an investigation, in conjunction with Swiss and Mexican
police, that resulted in the arrest of thirteen subjects in Switzerland, and the seizure of 84 kilograms of
heroin.
The DEA Guatemala City, Guatemala, Country Office played an integral part in twenty-five bilateral
investigations with Guatemalan drug law enforcement units. Working closely with their DEA
counterparts, Guatemalan drug law enforcement units improved their investigative abilities. These
bilateral investigations led to the seizure of 5,267 kilograms of cocaine, 11 kilograms of heroin, and
$255,600.
During 1997, the Panama Country Office, in conjunction with Panamanian law enforcement agencies,
initiated numerous investigations targeting Panama-based Colombian cocaine and heroin trafficking
organizations. These Colombian organizations used Panama as a storage and staging for their US and
European distribution operations. Authorities seized over 10,000 kilograms of cocaine in Panama during
1997 as a result of both joint and independent investigations.
In 1981, the state of Florida convicted Norwegian citizen Thor Holm Hansen on four felony drug counts
in the Southern District of Florida. He fled the United States and returned to Norway where he remained
a DEA fugitive for sixteen years. In March 1997, Hansen traveled to Brussels, Belgium, from Oslo,
Norway. At the request of the Brussels, Belgium, Country Office and the Miami Field Division, the
Belgian Gendarmerie arrested Hanson. The Belgian government approved US extradition requests in
August 1997, and Hansen currently awaits sentencing.
A joint investigation conducted by the Canberra, Australia, Country Office, the DEA Los Angeles Field
Division, and the Australian Federal Police resulted in the seizure of twenty-five tons of hashish from an
organization headed by David Zulik. Intelligence information and direct evidence developed by both the
DEA Los Angeles Field Division and the Australian Federal Police indicated this organization planned
to import twenty-five tons of hashish into the United States and Australia utilizing maritime resources.
During July and August 1997, an investigation conducted by the DEA Manila, Philippines, Country
Office and the Philippine National Police resulted in the seizure of approximately 2.25 kilograms of
Southeast Asian heroin as well as the arrest of several individuals including the Nigerian source of
supply. A subsequent investigation indicated that those arrested used the Philippines as a transshipment
point for a smuggling operation that shipped heroin from Thailand to the United States. Subsequently,
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DEA investigative activity succeeded in linking this organization to a series of domestic seizures
totaling more than sixty kilograms of heroin.
On July 20, 1997, Venezuelan authorities, working with the DEA Caracas, Venezuela Country Office,
seized the coastal freighter, Ricky II, in Port Cabello, Venezuela. An exhaustive search of the vessel
revealed hidden compartments which contained 4,181 kilograms of cocaine. This was the single largest
cocaine seizure in Venezuelan law enforcement history. Information leading to this seizure originated
from a joint investigation by the DEA Barranquilla, Colombia Resident Office and the Colombian
Prosecutors Office.
In early 1997, the DEA Singapore Country Office and the Indonesian National Police initiated a
bilateral investigation into the activities of Michael and Paul Miller. Authorities alleged the Millers
smuggled multi-ton shipments of marijuana from Thailand to the United States and laundered the
proceeds. Subsequently, this case developed into a multi-jurisdictional conspiracy involving DEA
offices in Hawaii, Idaho, Hong Kong, and Thailand. This investigation ultimately resulted in the arrest
of Michael and Paul Miller in May 1997 as well as the seizure of assets valued at more than $12 million.
Working with the Bulgarian Central Service for Combating Organized Crime, the Athens, Greece,
Country Office initiated an investigation resulting in the dismantling of an opium smuggling ring
operating out-of Sofia, Bulgaria. Intelligence gathered from the initial investigation resulted in a
subsequent case in California. In this California case, authorities seized $300,000. Consequently, the
DEA developed a major conspiracy investigation targeting Turkish and Iranian drug traffickers and
money launderers in the United States .
In June 1997 the Karachi, Pakistan, Resident Office provided information to the Pakistani AntiNarcotic Force (ANF) leading to the seizure of 580 kilograms of heroin destined for western markets.
As a result of the seizure, ANF made four arrests and identified the head of the drug trafficking
organization. This represents the largest heroin seizure in Pakistan's history.
A bilateral investigation conducted by the DEA Tokyo, Japan, Country Office and the Japanese
National Police Agency resulted in the seizure of 58 kilograms of methamphetamine from a North
Korean vessel in April 1997. Traffickers concealed the methamphetamine in large commercial cans of
honey. The DEA further assisted Japanese law enforcement authorities in conducting data systems
reviews, deciphering a suspected drug ledger, and sent investigative leads to the DEA Seoul Country
Office.
The DEA Belize City, Belize Country Office assisted its counterparts in three major operations
conducted in 1997. In March, a joint air, land, and sea interdiction effort netted a record seizure of 1,322
kilograms of cocaine.
(2) Coordinate Intelligence Gathering
The Brazilian Federal Police and the DEA Brasilia Country Office spearheaded a regional intelligence
program, based on an International Drug Enforcement Conference initiative, disrupting the
transshipment of cocaine and precursor chemicals across the contiguous borders of Brazil with the three
cocaine source countries of Colombia, Bolivia, Peru and Venezuela. The Brazilian Federal Police
program used police officers from Colombia, Peru, and Bolivia who work with the Brazilian Federal
Police, at eight strategically located Brazilian bases, to review and coordinate the dissemination of drug
intelligence.
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Intelligence information developed by the Rangoon, Burma Country Office (as well as other DEA
offices in Southeast Asia) enabled the Burmese government to significantly increase the seizure of
heroin and heroin refineries during the past year. During 1997, Burmese police, acting on information
provided by the Rangoon Country Office, seized thirty-three heroin refineries, 1,400 kilograms of
heroin, and more than 7.800 kilograms of opiate products in the Shan State. At the same time, the
Burmese army eradicated approximately 41,000 acres of opium during the 1997-98 cultivation cycle.
While these seizures represent only a small fraction of the heroin produced in this region, the sizable
increase in enforcement activity appears to reflect a stronger commitment by the Burmese government
in the fight against drug traffickers.
The DEA Panama Country Office used in conjunction with Panamanian authorities developed an
intelligence operation to monitor and target organizations suspected of transporting illicit narcotics via
vessel and/or land vehicles from Colombia through Panama to the United States. Using intelligence
gained from this effort, the Panama Country Office and host country counterparts coordinated with other
Central and South American DEA Offices to target organizations involved in both overland and
maritime smuggling
The DEA Bogota, Colombia Country Office continues working closely with the Colombian National
Police's Anti-narcotics Division to develop effective operational standards and intelligence bases to
support and conduct bilateral jungle operations. This program directly supports the DEA/Country Team
Flow Reduction Strategy which targets transportation and drug processing organizations operating from
Colombia's source zones. This program contributed significantly to Colombia's 1997 total cocaine
seizures of forty-two tons.
The DEA The Hague, Netherlands Country Office, the Dutch Prisma Police Team, the Bogota Country
Office, and the Miami Field Division targeted the OREJUELA and QUINCENO-BOTERO cocaine
organizations. Dutch officials traced the bulk of the cocaine entering Holland to these organizations. As
a result of this coordinated intelligence effort, Dutch officials arrested Luis Arnaldo Quinceno-Botero.
The Bangkok, Thailand, Country office participated in debriefing numerous drug trafficking defendants
incarcerated both in Thailand and the United States. Those interviewed included seven high level
members of the Shan United Army as well as the most significant Thai trafficker ever extradited to the
United States. Direct evidence and intelligence information developed as a result of these interviews
documents the exportation of more than twelve tons of Southeast Asian heroin from the Golden Triangle
to the US and other international markets since 1988.
The DEA Kuala Lumpur, Malaysia, Country Office and Seoul Country Office cooperated in the
initiation of a multilateral investigation involving law enforcement agencies from the United States,
Malaysia, and Korea. This cooperative effort produced an investigation that obtained and integrated
information provided by their law enforcement counterparts regarding the operations of a Nigerian
heroin trafficking organization. The information gathered from this investigation allowed Korean
Customs to obtain approval for the first "wiretap" investigation ever effected by Korean authorities in
drug enforcement operations.
Throughout 1997, DEA Seoul, Korea, Country Office participated with law enforcement agencies from
Korea and seventeen other Asian countries in the establishment of an intelligence information group
(ALDOMECICO) that collects, analyzes, and disseminates information on the activities of major drug
smugglers operating in Seoul. Information provided by ALDOMECICO thus far led to the arrests of five
Nigerian traffickers and will greatly assist law enforcement in disrupting West African traffickers active
in East Asia.
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In 1997, the Nicosia, Cyprus, Country Office initiated Operation Sham in which DEA Agents
investigated alleged Lebanese, Israeli, Syrian and Eastern European drug traffickers and money
launderers. Through Operation Sham, the Nicosia Country Office cultivated eight confidential sources
who provided banking transactions of alleged traffickers from four Lebanese banks. This information
shed light on the breadth of money laundering occurring in the Middle East.
(3) Engage in Foreign Liaison
In April, DEA sponsored the 15th annual International Drug Enforcement Conference (IDEC). At the
conference, hosted by the Royal Bahamas Police Force, 86 senior drug law enforcement officials from
29 member countries throughout the Western Hemisphere and observers from Europe, Asia, and
Australia met to discuss and exchange insights on counternarcotics enforcement activities. Police
officials from several countries, Colombia, Peru, Brazil and the Bahamas for example, outlined their
counternarcotics law enforcement strategies and shared lessons learned from multilateral investigations
and operations. During the conference, members adopted initiatives pertaining to the development of
regional multinational enforcement investigations and operations targeting major traffickers in the
hemisphere. The conference provided a forum for the delegates to exchange information and build
personal relationships that are key to enhancing closer coordination among law enforcement agencies.
In an effort to stem the increased flow of narcotics through Vietnam, the government of Vietnam
(GOV) established the Anti-Narcotics Police Division(AND) in February 1997. Established following a
series of liaison visits by DEA personnel (Bangkok Country Office), AND's mission involves Vietnam's
attempt to centralize and increase efficiency in its drug law enforcement.
During 1997, the DEA Peshawar, Pakistan, Resident Office maintained and developed ties with the
Taliban leadership involved in counternarcotics efforts in Afghanistan. The DEA primarily worked
with the Jalalabad-based Nangarhar Drug Control and Development Unit. In the latter part of 1997,
personnel from the Peshawar traveled to Jalalabad and Kabul, Afghanistan, as this event marked the first
DEA visit to Kabul in twenty years. Officials from the State High Commission for Drug Control
organized meetings with DEA as well as with department heads within the Commission. The trip
allowed DEA Agents to evaluate the sincerity of the Taliban to enforce its interpretation of the Koran as
it applies to narcotics. The Commission enthusiastically greeted the proposal for limited training by the
DEA.
The DEA Ottawa, Canada Country Office in conjunction with the El Paso Intelligence Center (EPIC)
was instrumental in obtaining the Mounted Canadian Police's participation in EPIC as an associate. DEA
Ottawa assisted in drafting the DEA/EPIC/RCMP Memorandum of Understanding (MOU). The MOU
provides for real time direct intelligence sharing between the RCMP and EPIC member agencies.
In 1997, the Singapore Country Office encouraged the government of Singapore to enter into an
agreement with the United States providing for the exchange of information relating to the laundering of
drug proceeds. This agreement facilitates the initiation of cooperative investigators and bolsters the
enforcement capability of both the United States and Singapore (under Singapore law, a designation
agreement must be in place prior to the exchange of drug related financial information). Both sides
expressed a firm commitment for the implementation of this agreement.
Building upon the prior successes of the People's Republic of China (PRC) Chemical Control Program,
the DEA continued playing a major role in the technological enhancement of this effective monitoring
program. During 1997, DEA installed a PC Computer Telecommunications Network at the Public
Security Bureau's National Narcotic Control Commission in Beijing. This new computer system
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provides the PRC with real-time chemical import/export information to target suspect chemical
shipments.
4) Coordinate Training Programs for Host Country Police Agencies
This topic is addressed in the International Training Section.
(5) Assist in the Development of Host Country Drug Law Enforcement Institutions
The DEA La Paz, Bolivia, Country Office and the Bolivian National Police established the FELCN
Sensitive Unit (SIU) in 1997. By September 1997, the SIU outfitted seventy-five fully vetted and trained
police officers. The SIU became an instant force multiplier to the FELCN Special Intelligence and
Operations Group (GIOE). Presently, the GIOE consists of ninety-eight police officers extensively
trained to conduct Bolivian drug investigations. The GIOE combined with the SIU culminated a banner
enforcement year with 213 investigations resulting in 680 arrests and 4.3 metric tons of cocaine, 108
parcel of real property, 183 vehicles, 10 aircraft, and 43 weapons seized.
The DEA Bogota, Colombia, Country Office and the Colombian National Police (CNP) established a
Sensitive Investigative Unit (SIU) which possesses semi-vetted CNP units working with fully vetted
investigative units. Based in Bogota, the current SIU strength is thirty-seven. To date, the SIU
coordinated over 300 seizure operations from the drug trafficking organizations of Jose SantacruzLondono, Pablo Escobar-Gaviria, and Ivan Urdinola and the Ochoa family. The CNP/SIU relied heavily
on Colombia's new asset forfeiture legislation which became law in December 1996.
In February 1997, Mexican authorities arrested General Jesus Gutierrez-Rebollo, head of the National
Institute to Combat Drugs, for collusion with reputed drug trafficker Amado Carrillo-Fuentes.
Abolishing the INCD, the Mexican government created the Fiscalía Especial para Atención de Delitos
Contra la Salud (FEADS) in May 1997. The DEA Mexico City Country Office works closely with
FEADS to assist with current investigations. DEA assists Mexican authorities through the process of
vetting candidates for components of FEADS. The aim of the process is to develop an uncorrupted corps
of narcotic investigators committed to the prosecution of high level traffickers.
The DEA Bangkok, Thailand Country Office, in concert with the Department of State and other United
States law enforcement elements, provided assistance to the Office of the Narcotics Control Board of
Thailand in an attempt to enhance the efforts in establishing a Drug Law Enforcement Academy in
Bangkok similar to the mission of the International Law Academy in Budapest. The academy in
Bangkok will concentrate on improving cooperation among the various Southeast Asian drug law
enforcement agencies. The DEA in Thailand worked closely with Thai authorities toward the
completion of the Songkhla Intelligence Center (SIC). This center operates as a multi-discipline tactical
intelligence center.
In 1997, the Government of Turkey passed the Control of Narcotic Substance Act and Amendments to
Executive Decree #178. These bills revised Turkey's anti-drug legislation by allowing controlled
deliveries and establishing a separate agency to investigate and prevent money laundering. DEA played
an instrumental role in passing these two bills. Within days of the implementation of these laws, DEA
Turkey initiated and successfully completed the first ever controlled delivery from Turkey, a 4.5
kilogram seizure of opium to Los Angeles. The subsequent investigation identified a major opium
smuggling organization operating in California and Texas.
The DEA Singapore Country Office provided strong encouragement to Indonesian authorities which
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served as the impetus for the recent passage of tough anti-drug legislation. The new law empowers
police and prosecutors with the necessary tools to increase their effectiveness. The law includes
provisions for the investigation/prosecution of conspiracy cases, the forfeiture of drug related assets, the
use of undercover operatives, and the imposition of mandatory-minimum sentences for drug related
crimes.
The DEA Seoul, Korea Country Office assisted Korean law enforcement authorities by providing model
US money laundering legislation. The Korean legislature passed money laundering legislation similar to
money laundering US laws in June 1997. Legislators expect the law to deter Korea from becoming a
major money laundering hub, particularly in light of the illegal Nigerian suspects operating in the
region.
The DEA Buenos Aires, Argentina, Country Office continues providing support to the Northern Border
Task Force in the Province of Salta, Argentina. The task force consisted of twenty officers from the
local provincial police and the national Gendarmeria. The task force's mission involves conducting
investigations against major Argentine, Bolivian, and Paraguayan trafficking groups operating along the
northern Argentine border.
Click here for DEA Assets chart
UNITED STATES COAST GUARD
Combined Operations
Coast Guard counterdrug law enforcement in the Caribbean and maritime borders of Latin America is
largely dependent on international combined operations. Partnering with law enforcement officials of
other nation helps develop indigenous interdiction forces and enhances the cumulative impact of
interdiction against drug traffickers in the region. Combined operations with foreign maritime forces
provide practical training for foreign, as well as Coast Guard personnel.
CARIBE VENTURE is a recurrent series of multinational operations in the Eastern Caribbean. The Coast
Guard sponsored three of these operations in FY 1997 and has extended CARIBE VENTURE 1/98
throughout the first half of FY 1997. Participants extend legal authority to law enforcement officials of
other nations that permit entry and pursuit of suspects through sovereign sea an air spaces. International
partners presently include: United Kingdom and dependent territories, the Netherlands and Netherlands
Antilles, France and the French West Indies, Dominican Republic, Antigua & Barbuda, St. Kitts &
Nevis, Anguilla & Montserrat, and Dominica. Other RSS member nations participate in combined
operations that are conducted in the vicinity of territorial sea and airspace's.
HALCON is a series of counterdrug and alien migrant operations between the Coast Guard and
Dominican Republic (DOMREP) Coast Guard. HALCON V, November 1996, resulted in the seizure of
25 pounds of marijuana and 3 migrant interdictions with 222 turn backs. Several operations are planned
for FY98, HALCON 1-98 was completed in December with negative results.
OPBAT is an ongoing interdiction program involving forward staged Coast Guard and Army air assets,
DEA agents, along with Bahamian Police and Turks and Caicos Islands Police forces. During FY 97
OPBAT forces seized; 5,137 pounds of cocaine, 21,953 pounds of marijuana, 5 pounds of heroin, 4
vessels and made 27 arrests. There are three primary staging sites for Coast Guard and Army helicopters
which may respond to targets throughout the Bahamas and Florida Straits. OPBAT style techniques were
exported to other regions of the transit zone (Operation BLUE SKIES) and is being considered for
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implementation in other regions of the Caribbean in FY98. During FY97 the Coast Guard also
conducted 6 separate operations with the Bahamian government.
BLUE SKIES was an operation designed to use OPBAT techniques in Antigua, St. Kitts, Dominica,
Grenada, Trinidad, St. Lucia, and Netherlands Antilles. The operation involved two Coast Guard
helicopters, several foreign and US vessels. The operation was very successful seizing 10,250 pounds of
marijuana, locating and eradicating an additional 80,500 pounds of marijuana, and the seizure of 67
rocks of cocaine.
OPVISTA missions were conducted frequently during the year by a high or medium endurance cutter
operating in the Caribbean or Eastern Pacific. In FY97 OPVISTA's were conducted in Honduras and
Dominican Republic. The Coast Guard cutter crew conducted training with members of the host nations
navy for 1 week and provided domestic support in the form of humanitarian aid.
OP LAMBI and FRONTIER ADVANCE operations were conducted with the Haitian Coast Guard for the
first time in FY97. These operations were very successful and provided a tremendous amount of training
to the Haitian Coast Guard. In addition, the Coast Guard has been embarking a Haitian Coast Guard
shiprider on its cutters for most of FY 97 to conduct combined operations in the territorial waters
surrounding Haiti. The embarkation of Haitian Shipriders has been very successful resulting in 6
counterdrug cases yielding the seizure of 9,600 pounds of marijuana and 6,405 pounds of cocaine.
The Coast Guard also conducts coincidental operations with the Mexican Navy in the Gulf of Mexico
and the Eastern Pacific. During these operations, Coast Guard and Mexican Naval units operate
simultaneously, and exchange on-scene information which may assist in interdiction of drug traffickers.
The coordination and frequency of these operations is expected to increase in FY 1998. The Coast
Guard assisted the Mexican Navy with the seizure of 12,868 pounds of cocaine and 4,000 pounds of
marijuana in FY97. In addition Coast Guard LEDET's have provided dockside boarding technical
assistance to the Mexican government several times in FY97.
In FY1997 the Coast Guard established communications protocols between the US Coast Guard and the
Mexican Navy to facilitate the rapid, and accurate exchange of maritime tactical information in the Gulf
of Mexico. This communications regime allows on scene commanders to respond in a timely fashion to
operational events occurring across the Texas/Mexico maritime border. In FY98 efforts will be to
establish a similar communications regime on the California/Mexico border.
Law Enforcement Detachments (LEDETS) are largely responsible for the success of combined
operations with foreign countries. Coast Guard currently deploys LEDETS on British and Dutch
warships which extends the Coast Guard's unique maritime law enforcement authority. LEDETS
assisted foreign countries with the seizure of over 13,000 pounds of cocaine in FY 97. LEDETS also
provide technical support to foreign countries conducting dockside boardings when requested by the
foreign country.
Maritime Counterdrug Agreements
Coast Guard officers are key members of interagency US delegations traveling to Caribbean countries to
negotiate bilateral maritime counterdrug agreements. The "Six Part" model agreements include
shipboarding, shiprider, pursuit, entry-to-investigate, overflight, and order to land provisions. Coast
Guard officials are also assisting the State Department in negotiating agreements to improve maritime
migrant interdiction operations.
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Coast Guard officers are also posted in key embassies of source and transit zone countries. Current
billets include: Bahamas, Colombia, Dominican Republic, Haiti, Mexico, Panama, and Venezuela.
Additional countries are going to be added in FY98. These officers coordinate a significant amount of
informal training and assistance to host nation forces by visiting Coast Guard cutter and aircraft
crewmembers.
Transferred Ships in FY97 and Planned FY98
82 ft. Patrol Boat
180 ft. Buoy Tender
157 ft. Buoy Tender
133 ft. Buoy Tender
FY 97
Planned in FY 98
(1) Estonia
(1) Ecuador
(1) St. Lucia
(1) Antigua
(2) Venezuela
(2) Panama
(2) Colombia
(1) Guinea
(2) Trinidad
(1) Cape Verde
(1) Colombia
(1) Ecuador
(1) Philippines
(2) Argentina
(1) Tunisia
(1) Morocco
Training
The US Coast Guard can provide training in ALL Coast Guard Core Mission Area skills, from the basic
to advanced levels. The four Core Mission areas are Maritime Law Enforcement, Maritime Safety,
Marine Environmental Protection and Defense Readiness. Specific skill sets include enforcement of
laws and treaties (counter-narcotics, fisheries, smuggling, alien interdiction); search and rescue; marine
environmental response and protection; safety and security of marine transportation, ports, waterways
and shore facilities; contingency and response planning; legal authority and jurisdiction; resource
management to include budget formulation and workforce planning, training and retention; and national
defense preparedness.
The training program development process begins by first assessing the state of the partner nation's
maritime program, resources and the organization designated as the lead for this responsibility. A
tailored, and possibly joint, training plan is then developed to meet the partner nation's program goals.
Ultimately, in-country teams assist the partner organization carry out the developed training plan to the
point of established self-sufficiency. The team can assist a country in achieving national maritime goals
in non-defense areas within the US Coast Guard's area of expertise. Should the partner nation have a
mission or issue that is covered by multiple US agencies, which includes the US Coast Guard, the team
leader will assist in acquisition of personnel from other US agencies. Mission Areas that have been
addressed by previous Coast Guard and Joint training teams have been: evaluation of maritime law
enforcement programs, development of model ports relative to narcotics intervention, creation of an
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implementation plan for a multi-mission, multi-agency maritime service management model, and
development of training plans and institutions for multi-agency marine safety and maritime law
enforcement programs.
The following pages provide actual and projected training and assistance events for FY 97 and FY 98.
FY97
Course Title
Funds
Cost
Dates
UNITED STATES CUSTOMS SERVICE
International drug interdiction training is a vital segment of the activities, interests, and mission of the
US Customs Service. Training is funded and approved by the Department of State and provided to drug
control agencies with interdiction responsibilities in countries considered significant to US narcotics
control efforts.
In FY 1997, 2 International Visitor Programs (IVP), involving 9 participants, were conducted in the US.
A total of 35 programs were conducted outside of the US, involving 1,926 participants in 32 countries.
These included 10 Overseas Enforcement Training (OET) Programs for individual countries; 5 Regional
Overseas Enforcement Training (ROET) Programs for two or more countries; 4 Train-the-Trainer
Workshops (T3W) for individual countries; 2 Regional Train-the-Trainer Workshops (RT3W) for two or
more countries; and 14 Money Laundering Seminars (MLS), with two of these programs being regional
programs. In addition, Short Term Advisory Programs were conducted in three countries.
FY 1997 was the seventh year in which INL funded US Customs' international training for the Carrier
Initiative Program (CIP), and the first in which INL funding was provided for the Business AntiSmuggling Coalition (BASC). BASC is a business-led, US Customs-supported alliance created to
combat narcotic smuggling via commercial trade. FY 1997 INL funds were used to present CIP and
BASC training to 1,098 employees in six programs. These programs were offered in the following
countries: Colombia, Costa Rica, Panama, Peru (two programs), and Mexico. Furthermore, site surveys
were conducted in Colombia, Costa Rica, Panama, Mexico, Trinidad & Tobago, Barbados, and Antigua.
Costs relating to these programs are partially offset by the sponsoring commercial transportation
companies.
At present, 2,775 sea carriers, 875 land border carriers, and 150 airlines participate in the Carrier
Initiative Program, for a total of 3,800 signatories. In FY 1997, CIP participants effected 87 foreign
interceptions of illegal drugs, with a total weight of 13,698 pounds. They also provided information and
assistance leading to 74 drug seizures at the US border, with a weight of 12,727 pounds. In total, CIP
signatories participated in 161 interceptions and seizures, preventing 26,425 pounds of illegal drugs
from entering the US. Over 140 foreign manufacturers and exporters have begun participating in the
BASC since its inception in 1996. Information and/or action taken by companies involved in the BASC
resulted in five (5) seizures (domestic and foreign) totaling over 6,000 pounds of cocaine.
In addition to the normal schedule of International Narcotics Control Training programs conducted
under the auspices of INL, US Customs carried out a number of narcotics control projects making use of
funds outside of the annual INL allocation. These programs were in response to high priority concerns.
Among these are the following:
z
Non-INL funded CIP/BASC programs were conducted in Peru, Venezuela, and Ecuador. At each
of the above stated presentations, 100-150 individuals were in attendance. It is anticipated that the
ACSI program (discussed below) will help to officially enlist those companies that have expressed
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z
z
Page 12 of 14
an interest.
A Carrier Initiative Conference was held in Orlando, Florida, with the purposes of increasing
coordination, cooperation, and communication between US Customs and the trade community and
to develop a strategy for the meaningful expansion of the Carrier Initiative and BASC Programs
into the 21st Century.
America's Counter-Smuggling Initiative (ACSI) has been initiated. ACSI was one result of the
above mentioned Orlando CIP conference. ACSI will build upon the success of the Carrier
Initiative Program (CIP) and Business Anti-Smuggling Coalition (BASC) by expanding US
Customs' anti-narcotics security programs with industry and governments throughout Central and
South America. The Offices of Field Operations, Investigations, International Affairs, and
Intelligence will detail officers to assist exporters, carriers, manufacturers, and other businesses in
selected high-risk countries. The countries initially targeted by ACSI are as follows: Chile,
Colombia, Costa Rica, Ecuador, Mexico, Peru, and Venezuela. A prototype team was in
Venezuela from October to December, 1997. During that time, the team made BASC
presentations to 528 individuals involved in export-related industries; provided training to 69
government officials on container examinations, concealment methods and aircraft search; and
conducted security surveys of 89 manufacturing and transportation facilities.
Operation Laser Strike is a DOD-sponsored counterdrug initiative created to disrupt cocaine traffickers
in the South American source zone. With the recent success of air bridge interdiction efforts in the
region, it is expected that traffickers will resort to the oceans/waterways as a principal means of
transporting their contraband. In support of Laser Strike, US Customs and the Coast Guard conducted
INL-funded port assessments in Ecuador and Peru during FY 1997.
In 1997, the United States signed Customs Mutual Assistance Agreements (CMAAs) with Japan,
Kazakhstan, Slovakia, Venezuela, and the European Community. CMAAs provide for mutual assistance
in the enforcement of any laws related to Customs, and US Customs uses these agreements to assist in
the gathering of evidence for criminal cases involving narcotics smuggling and money laundering. US
courts have ruled that evidence gathered via these executive agreements is fully admissible in US court
cases.
Particularly noteworthy in assessing the US Customs INL-funded international training for FY 1997 are
the following reports on the results of the training efforts in terms of narcotics seizures, improvement in
the organization of anti-narcotics law enforcement and increased public awareness:
z
z
z
z
As a result of a multi-agency assessment participated in by US Customs, it was reported by the
US Embassy in Pretoria that the government of South Africa set up an operational working group
to coordinate the training activities of the major border control agencies. This body also undertook
to sort out the functions of the participating agencies, looked at opportunities for cross-training
among agencies, and worked to determine how to implement improvements recommended by the
report of the assessment team.
The US Embassy in Bogota reported that a US Customs presentation in March to Colombian
businessmen on ways in which exporters could help prevent drugs from being placed in their
shipments resulted in what the representative of the Colombian-American Chamber of Commerce
considered to be the largest turnout of businessmen which he had ever helped arrange.
The Swazi police indicated to the US Embassy in Mbabane that its seizure of over $1 million
worth of marijuana resulted partly from INL-provided equipment and regional training delivered
by US Customs with INL funding. This was the largest drug interdiction to date in Swaziland.
The Venezuelan National Guard informed the US Embassy in Caracas that its inspectors had
immediately put to use profiling techniques derived from US Customs training to arrest two
individuals smuggling cocaine into Venezuela from Colombia.
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Page 13 of 14
The Director of the Narcotics Affairs Section at the US Embassy in Lima stated that a seaport
counter narcotics interdiction course offered by US Customs had helped to impart the concept of
joint operations among personnel of the Peruvian Navy, Customs, Coast Guard, National Police,
and the port authority.
In FY 1997, the US Customs Service shared financial assets on 7 occasions with three countries:
Canada
England
Royal Cayman Island
$ 82,676.14
$250,400.00
$9,973.52
Total:
$343,049.66
Training Statistics
Programs
Training in the US:
International Visitor
Program
SUBTOTAL:
Number of Programs
Number of Participants
2
9
2
9
10
314
5
142
4
51
2
25
14
1,394
6
1,098
Anti-Smuggling
Coalition
SUBTOTAL:
41
3,024
TOTAL:
43
3,033
Training in host
countries:
Overseas Enforcement
Training
Regional Overseas
Enforcement Training
Train-the-Trainer
Workshop
Regional Train-theTrainer Workshop
Money Laundering
Seminar
Carrier Initiative
Program/ Business
[end of document]
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Return to International Narcotics Control Strategy Report. This is an official U.S.Government source for information on the WWW. Inclusion of non-U.S. Government links does not
imply endorsement of contents.
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International Narcotics Control Strategy Report, 1997
Page 1 of 24
The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
This site is not updated so external links may no longer func
us with any questions about finding information.
NOTE: External links to other Internet sites should not be co
endorsement of the views contained therein.
International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
SOUTH AMERICA
ARGENTINA
I. Summary
Argentina is not a major drug producing country, although its shared border with Bolivia makes it a
transshipment point to Europe and the US, especially for cocaine. Although drug use in Argentina
remains low, there is a growing problem with cocaine and psychopharmaceuticals such as "ecstasy."
While aware of its responsibilities in narcotics law enforcement, the Government of Argentina (GOA)
focuses its counternarcotics efforts on demand reduction. Legislation dealing with money laundering,
asset forfeiture, controlled deliveries, and the use of paid informants remain under legislative
consideration. Federal counternarcotics policy is coordinated by the Secretariat for the Prevention of
Drug Addiction and Narcotics Trafficking (SEDRONAR). The GOA has several security forces
involved in counternarcotics efforts, and provincial police forces also play an integral role. Argentina is
a party to the 1988 UN Drug Convention.
II. Status of Country
Argentina is not a major drug producing country. Drug use is low, estimated to be approximately one
percent of the population. Drug crop production is negligible. Small amounts of illicit drugs are
produced in minor sites in the north of the country, as well as in the Buenos Aires province. Most
official and private observers agree that the trafficking of narcotics through Argentina has increased over
the past few years, although no reliable flow assessment is available. Argentina has a large and welldeveloped chemical industry that manufactures almost all the precursors necessary for the processing of
cocaine. Buenos Aires is a regional financial center that could be used by money launderers.
Bolivia is the most common source of cocaine entering Argentina, although some cocaine and other
drugs, such as marijuana, enter via Paraguay and Brazil. Although the amounts remain small, there has
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been an increase in the transit of heroin from Colombia. Argentine authorities also have noted an
increase in the use and manufacture of psychopharmaceuticals such as "ecstasy."
Argentine authorities are concerned about evidence of growing domestic drug consumption as the
economy has improved. As drugs transit the country, more become available for domestic use,
especially by young people. A recent study showed that some three percent of students in the province
of Buenos Aires had tried cocaine. Cocaine is the drug of choice for 81 percent of the country's drug
consumers.
III. Country Actions Against Drugs in 1997
Policy Initiatives and Accomplishments. The Government of Argentina actively opposes drug
trafficking and the sale and use of illegal narcotics within the country. Argentina is a party to the 1988
UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. In 1989, the
Argentine Congress passed the laws necessary to implement the 1988 UN Convention. Various
presidential decrees since then have targeted money laundering and allowed asset seizures.
Also in 1989, the Menem Administration established the Secretariat for Prevention of Drug Abuse and
Narcotics Trafficking (SEDRONAR) to serve as the central antidrug coordinating organization for the
federal government. In 1996, the government published a federal plan to combat illegal drugs and
established a national strategic commission to oversee these efforts. The plan was designed to better
coordinate the counternarcotics efforts of the federal and provincial police forces. SEDRONAR was
charged with identifying the extent of the narcotics problem in Argentina and drafting a coordinated
plan to address the problems on a national basis. In 1997, SEDRONAR held a series of meetings with
both federal and provincial police forces to examine the problems and to discuss possible ways to
improve previously limited cooperation. At the same time, the forces involved developed exercises to
put into practice what had been discussed in the meetings.
Argentina remains very active in multilateral counternarcotics organizations such as the InterAmerican
Drug Abuse Control Commission (CICAD), the International Drug Enforcement Conference (IDEC),
and the UN Drug Control Program. In 1997, Argentina hosted the eighth meeting of the Heads of
National Drug Enforcement Agencies for Latin America (HONLEA) and a CICAD demand reduction
experts' group meeting.
Enforcement Efforts. Argentina has a large collection of federal and provincial police forces involved
in the counternarcotics effort. The primary federal forces involved are the Federal Police (with
jurisdiction for crimes committed in or connected to the federal capital), the Gendarmeria Nacional
(border police), the National Customs Service, and the Coast Guard. The provincial police forces of
Buenos Aires, Salta, and Jujuy are also very involved in counternarcotics efforts.
Private and commercial vehicles, containerized rail cargo, and foot traffic are all used as means of entry.
There are indications of larger shipments entering the country on private aircraft but hard evidence is
lacking on the volume of such flights. However, the thousands of uncontrolled airfields and small
municipal airports in northern Argentina make this a likely means of transporting drugs into the country.
The lack of adequate national radar coverage is another factor that could make aerial trafficking more
attractive to potential traffickers. Riverine traffic from Paraguay and Brazil is another method for
moving narcotics into Argentina. Drug shipments out of the country leave mostly via couriers on
commercial aircraft or through the port of Buenos Aires concealed in containerized cargo. The
destination for most of the narcotics transshipped through Argentina is Europe and the United States.
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Drug Flow/Transit. Argentine authorities seized over 3,500 kilos of cocaine hydrochloride (HCl) in the
first half of l997 alone. This compares with 2,333 kilos seized in all of l996. One recent seizure involved
400 kilos that were being transported by truck from Bolivia. In April, the Buenos Aires Provincial
Police seized 2.2 MT of cocaine secreted in a commercial cargo container that originated in Colombia,
and was in transit to Germany. Most observers believe that only a small fraction of the drugs that transit
Argentina is discovered.
The government introduced new machinereadable passports in l996 and opened a solicitation for new
tamperresistant national identification cards. Argentina and its MERCOSUR colleagues have already
agreed to produce and issue "smart" border crossing cards in selected frontier zones that will incorporate
the latest technology for monitoring individuals potentially involved in transnational crimes.
Corruption. Corruption is a major issue in Argentina. Both the Buenos Aires provincial police and the
National Customs Service have been severely affected by allegations of widespread corruption. The
Argentine government does not encourage or facilitate drug trafficking or money laundering. On
November 19, 1997, the InterAmerican Convention Against Corruption entered into force for Argentina
under domestic law. President Menem also announced that he would issue presidential decrees to help
prevent corruption by senior government officials. In mid1997, the Office of Public Ethics was
established, although in its first three months the office has yet to receive a complaint.
All of Argentina's security forces face continuing severe budget limitations which have hampered
investment in equipment and training. A lack of coordination between the many and, at times,
competing, law enforcement organizations has hurt effectiveness. The 1996 National Drug Plan
recognized this problem and some steps have been taken to try to alleviate it.
Agreements and Treaties. In 1989, the United States and Argentina signed a cooperation agreement
against drug trafficking which was implemented annually until 1995 through a series of memoranda of
understanding. The programs continue, using money committed during earlier years. During that time,
USG assistance totaled approximately $2.9 million. Just over $2 million was used to supply equipment,
with the balance used for training programs for Argentine law enforcement personnel.
In 1990, the United States and Argentina signed a Mutual Legal Assistance Treaty (MLAT), which
entered into force in February 1993. In 1997, the United States and Argentina signed an extradition
treaty that has not yet entered into force pending ratification by both parties. A memorandum of
understanding between the US Treasury Department and SEDRONAR dealing with the exchange of
financial information relating to money laundering was signed in 1995.
The GOA is a party to the 1988 UN Convention. It has bilateral narcotics cooperation agreements with
Russia, Italy, the United Kingdom, Germany, Turkey, Romania, Bolivia, Brazil, Chile, Paraguay,
Uruguay, Colombia, Ecuador, Peru, Venezuela, Costa Rica, El Salvador, Guatemala, Nicaragua, Cuba,
Jamaica, and the Dominican Republic. The GOA may soon sign a multilateral agreement with the
European Union dealing with the exchange of information on precursor chemicals.
Dublin Group Assistance. Assistance provided by other Dublin Group donor countries has been
limited. Germany has provided $500,000 in assistance and currently provides limited training
opportunities. The United Kingdom, Italy, and France also provide training and assistance.
Demand Reduction. SEDRONAR Secretary, Julio Cesar Araoz, has focused Argentine efforts on
demand reduction. He has given priority to education and drug treatment programs. In Argentina, drug
use is considered a medical problem for which addicts are eligible to receive government-subsidized
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treatment.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. Cooperation between USG and Argentine authorities, both federal and
provincial, on counternarcotics efforts is excellent. While there has not been any bilateral memorandum
of understanding since 1995, State Department funding continues to be used to provide a wide variety of
training programs to Argentine law enforcement officials. State/INL funding is also used to supply
needed information technology equipment to better coordinate police counternarcotics efforts.
With USG support, a "Northern Border Task Force" in the frontier region with Bolivia has been created.
The task force has 20 officers, a mix of provincial police and Gendarmeria, and is devoted to
counternarcotics work. US funding has been used to supply equipment, training and vehicles for the
unit. The US Embassy in Buenos Aires also supports GOA efforts to enact a law to allow the use of
undercover agents and controlled deliveries, as well as the use of informants.
In the area of demand reduction, INL funding is supporting an Argentine version of the "Partnership for
a Drug Free America." Local support is being developed to advance a media campaign related to this
project.
Road Ahead. In 1998, the US Embassy will work with the GOA to strengthen counternarcotics law
enforcement efforts in port areas. US Customs and US Coast Guard will provide training to enhance
GOA law enforcement capabilities to inspect both port and river cargo. DEA will continue to provide
training in investigative techniques, as well as money laundering and financial crimes seminars. The
USG will work with the GOA to enhance the Argentine Joint Information Coordination Center, as well
as the Northern Border Task Force.
BOLIVIA
I. Summary
Bolivia trails Peru and Colombia in the total amount of coca under cultivation, but produces coca plants
with a higher percentage of cocaine alkaloid than Colombia. It also produces more refined cocaine
hydrochloride (HCl) than Peru. The illegal coca/cocaine industry in Bolivia is increasingly under the
control of Bolivians, with the participation of foreigners primarily relegated to the refining of base into
HCl and to transporting cocaine out of Bolivia. Although eradication slowed in April and did not
effectively resume until early October, Bolivia met its gross eradication goal of 7,000 hectares for 1997.
The net reduction of nearly seven percent of illicit coca leaf achieved this year was primarily the result
of effective campaigns against seedbeds and young coca plants conducted in 1995 and 1996. There was
not a similar focus in 1997, despite the government's announced intentions to target seedbeds and young
plants in the remainder of the year. Bolivia is a party to the 1988 UN Drug Convention.
As with the rest of its program of consensus-building, Bolivia's new government is pushing toward a
national accord on counternarcotics strategy via a series of broadly based national dialogues. Total
narcoticsrelated arrests increased dramatically in 1997, and seizures of cocaine HCl were also up. Agua
rica and coca leaf seizures decreased, as did seizures of most essential chemicals. The Bolivian Navy's
Blue Devil Task Force was granted law enforcement authority, a change likely to facilitate interdiction
on the country's waterways. Alternative development initiatives were highly successful in providing
farmers viable, legal alternative crops and helped solidify public opinion against coca cultivation. The
legislature is considering critical judicial reforms to modernize the Bolivian judicial system, including
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revisions to Law 1008, Bolivia's basic counternarcotics law.
II. Status of Country
According to USG experts, Bolivia produces over a quarter of the world's coca leaf, and about 30
percent of its cocaine supply. At the end of 1997, there were approximately 45,800 hectares of coca
under cultivation in Bolivia: 31,500 in the Chapare, which is a net reduction of 1,500 from the
December 1996 estimate; 14,000 in the Yungas (2,000 more than the 12,000 hectares permitted by
Bolivian law), and 300 in Apolo. Even with the eradication of 7,026 hectares, 5,570 hectares of new
coca were planted.
Almost all Chapare coca is made into cocaine products, as is an increasing percentage of Yungas leaf.
The Apolo region does not appear to be a significant contributor to the illegal trade. USG experts
estimate that one hectare of Bolivian coca, yields an average of 2.7 metric tons of sundried coca leaf (the
form in which it is typically marketed and processed); that amount of leaf can produce 7.44 kilos of
cocaine. Thus, 363 kilos of sundried leaf, or .134 hectares, are required to produce a kilo of cocaine.
Fully-dried Chapare coca is about sixteen percent lighter than sundried leaf and contains 0.72 percent
cocaine, of which 45 percent is recoverable by typical cocaine base laboratories. The total potential
cocaine production of the Chapare is, therefore, about (20,800 mature hectares times 7.44) 154,800
kilos, a 14 metric ton or eight percent reduction from 1996. Based on these formulae, the eradication of
7,026 hectares of Chapare coca during this year prevented the manufacture and export of approximately
52 metric tons of cocaine.
Smuggling precursor chemicals and cocaine products within Bolivia is becoming increasingly
sophisticated and is now controlled almost entirely by Bolivians. Most of the refined cocaine being
transported to Brazil, Chile, Argentina and Paraguay for further consolidation and transportation to
consumer countries is still reaching Santa Cruz drug labs in base form. However, there is clear evidence
that labs in Cochabamba, Santa Cruz, the Beni, and El Alto La Paz are now producing HCl. As Bolivian
traffickers have improved their refining capabilities, the importance of foreign-operated labs in Bolivia
has diminished.
Although the performance of Bolivian enforcement agencies has improved markedly, efforts to control
the flow of smuggled or illegally diverted chemicals have not greatly reduced their availability. Bolivian
traffickers still rely primarily on foreign chemicals to supply their labs, but illegal chemical laboratories
in Santa Cruz are now producing ether in limited quantities.
The new government has introduced four legislative initiatives that could, when enacted, result in a
fairer and more transparent judicial system. Discussion of one of the bills, a revision of the code of
criminal procedure, has highlighted inconsistencies between Bolivia's constitution, the proposed code
and Law 1008, the counternarcotics law. While agreeing with critics that some procedural aspects of
Law 1008 should be revised, the government has made clear its intention to retain or strengthen its
substantive provisions.
III. Country Actions Against Drugs in 1997
Policy Initiatives. In response to coca growerinitiated violence in the Chapare in April/May, and in
hope of reducing the impact of its eradication program on its electoral prospects in the June general
election, the Sanchez de Lozada government substantially slowed the pace of eradication during its final
four months in office. A new governing coalition, headed by Hugo Banzer Suarez, took office in August
well behind the schedule established to permit Bolivia to reach the 1997 gross eradication goal of 7,000
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hectares. Believing it could make up the deficit via negotiated agreements with key coca grower
federations, the new government lost valuable time and was ultimately disappointed by the failure of the
growers to deliver on their promises. In early October, a personnelintensive and costly involuntary
eradication program began, which enabled Bolivia to reach its gross eradication target for 1997.
Upon taking office, President Banzer pledged to rid Bolivia of all illicit coca by the year 2002, and
announced that the counternarcotics program would be one of four priorities for his government. VicePresident Jorge Quiroga chaired a national roundtable discussion on narcotics that included
representatives of virtually every sector of Bolivian society. Regional dialogues followed and a
comprehensive counternarcotics strategy was issued before the end of 1997. The strategy describes,
among other things, how the government plans to prevent new plantings of coca, and establishes a
schedule for reducing and ultimately eliminating individual compensation for eradication.
The Sanchez De Lozada government never implemented an eradication program in the Yungas region
and, despite an encouraging start, it quickly abandoned its policy of arresting and prosecuting persons
who plant coca. Understanding that no eradication program can be successful if new crops of coca are
permitted and if increased interdiction and eradication pressure in the Chapare merely results in
increasing cultivation in the Yungas, the Banzer government has pledged prompt action regarding both
issues.
In addition, the Sanchez De Lozada government was unable to develop a workable program to control
the legal coca market. As a consequence, the USG terminated assistance to the agency charged with
monitoring the legal trade in coca.
Narcotics related arrests increased by 85 percent in 1997, and seizures of cocaine HCl were up by 21
percent (comparing CY96 to CY97). The Special Investigative Units, vetted and trained in the US, have
returned to Bolivia and are actively engaged in their own operations and in supporting the ongoing
investigations of other Bolivian counternarcotics units. Enforcement of recently enacted legislation
criminalizing money laundering has been delayed pending clarification of lines of authority and
identification of funding sources.
Accomplishments. Agreements and Treaties: Bolivia is a party to the 1961 Single Convention on
Narcotic Drugs, its 1972 Protocol, the 1971 Convention on Psychotropic Substances and the 1988 UN
Convention. Bolivia has complied with its obligations under bilateral counternarcotics agreements with
the USG. A new extradition treaty between the USG and Bolivia was signed in 1995 and entered into
force in 1996.
Production and Distribution. For the second year in a row, potential cocaine production in Bolivia
declined. Production dropped primarily because successful programs targeting seedbeds and young coca
plants in 1995 and 1996 led to a net reduction in the total crop. Another key factor was that a large
percentage of the crop again consists of coca that is too young to harvest or yield as much alkaloid as a
mature plant. Seizures of HCl increased, exceeding those of the previous year by more than 21 percent.
Meanwhile, seizures of cocaine base remained fairly consistent with 1996 levels, while coca leaf
seizures fell by 34 percent. Chemical seizures reflect the changing nature of the cocaine industry, as use
of some essential chemicals has been reduced while use of others has increased. In general, these data
support the contention that Bolivians have shifted from their role as providers of raw material, and are
increasingly involved in the processing of refined cocaine products.
Alternative Development. Alternative Development programs administered by the US Agency for
International Development (USAID) have created sustainable income-generating alternatives for
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farmers in the Chapare. Under this program, communities of farmers sign agreements with Bolivia's
eradication agency (DIRECO) to establish community level eradication targets. Alternative development
activities, such as technical assistance and training on alternative crop production, are provided as long
as the community maintains the coca eradication schedule.
This program has yielded significant results. Prior to 1992, coca was the principal crop grown in the
Chapare. The hectarage in licit crops in the Chapare is now three times greater than coca cultivation, and
127 percent greater than 1986. Licit agricultural production in the Chapare now represents 1.5 percent of
Bolivia's gross domestic product. The success of this program has enabled the Government of Bolivia to
effectively counter arguments that coca eradication impoverishes poor farmers and makes the goal of
total coca eradication politically feasible.
Asset Seizures. Although records of the Seized Asset Directorate indicate it should have approximately
$27 million in assets under its control, it has so far been able to account for only 60 percent of the real
and personal property reflected in its inventories. Much of the unaccountedfor property is believed to
have been informally assigned to counternarcotics agencies and officials. The Directorate has partially
overcome its problems with judges who refused to sanction sales or turn over proceeds to the
government as required by law. The government has received almost $700,000 from sales in Oruro and
Santa Cruz during this year.
Extradition. The 1995 USBolivia extradition treaty, which includes provisions for the extradition of
nationals, is in force. In 1997, the Government of Bolivia granted extradition for two Bolivian nationals
under the new treaty.
Law Enforcement Efforts. The reorganization of the Special Narcotics Task Force (FELCN)
Command, assigning the position of Director General of the organization to an active duty police
officer, instead of a retired senior military officer, improved coordination and morale within FELCN
headquarters and its district commands. Naming a National Commander for the Rural Counternarcotics
Police (UMOPAR) had a similar effect on UMOPAR detachments in the Chapare, Trinidad and the
Yungas. UMOPAR mobile interdiction teams accounted for almost half the arrests and more than a third
of the cocaine seizures made countrywide.
The new Air Force Chief revised the chain of command of his branch to relieve members of the Red
Devil Task Force, a UH1H helicopter unit based in Santa Cruz, and part of FELCN, of all noncounternarcotics-related military responsibilities.
The government granted law enforcement authority to the Blue Devil Task Force, a Bolivian Navy
riverine unit that previously had provided only logistical support to FELCN and other counternarcotics
organizations. This change should produce a measurable improvement in interdiction efforts on Bolivia's
waterways.
Corruption. Neither the present government nor its predecessor condones, encourages or facilitates any
aspect of narcotrafficking. There were no major cases of public corruption brought before Bolivian
courts in 1997. However, police, military and judicial corruption remains widespread, as evidenced by a
midlevel FELCN officer's arrest for possession of more than 50 kilos of HCl, and the involvement of
several Navy officers in the operation of a car theft ring based in Santa Cruz. Anecdotal evidence of
judicial corruption abounds, but investigation and prosecution of members of the judiciary is
complicated and rarely successful. The government's reform package, presently before the legislature,
addresses most of the court system's structural and integrity problems.
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Demand Reduction Programs. Inhalants are the drug of choice for most Bolivian consumers. A 1996
study conducted by CELIN indicates that 2.4 percent of the population uses or has used cocaine
products on a regular basis. Nearly 11 percent of those interviewed admitted to using inhalants, cocaine,
marijuana or hallucinogens at some time, seven percent within the year prior to the study. The new
government plans to emphasize prevention and treatment, and has upgraded the office charged with
these responsibilities to a vice-ministry.
IV. US Policy Initiatives and Programs
Policy Initiatives. The key to ending illicit coca production in Bolivia is to determine what measures are
needed to prevent new plantings. The USG counternarcotics strategy seeks to combine a vigorous law
enforcement and interdiction program with voluntary and involuntary eradication efforts to force coca
growers to seek other, legal and economically viable alternatives. USGsponsored alternative
development programs and Bolivia's general development efforts have provided such opportunities for
thousands of Bolivians. The present government has set as a goal eradicating all illicit coca by the year
2002, and cooperating with the USG and other donors in building viable, selfsustaining counternarcotics
organizations. Other USG counternarcotics objectives include development of an effective criminal
justice system, expeditious handling of asset seizure and forfeiture procedures, and attacking corruption.
Bilateral Cooperation. Despite the midyear lull, Bolivia reached its gross eradication goal of 7,000
hectares. Joint interdiction and law enforcement efforts resulted in record numbers of arrests and
seizures of cocaine products and essential chemicals. Money laundering provisions of the revised
criminal code are not yet being implemented, nor has the Superintendency of Banks (in which the new
unit will reside) been anxious to accept the terms under which the unit will operate. However, the grant
of law enforcement authority to the Blue Devil Task Force, cooperation in the establishment of the
Special Investigate Units, and compliance with the terms of the 1995 extradition treaty are all indicators
of the Bolivian government's determination to meet its bilateral obligations.
Road Ahead. Bolivian public opinion and the country's major political parties now appear to accept the
need to eradicate illegal coca and support the principal elements of the USG-Bolivia counternarcotics
program. The Bolivian government's counternarcotics strategy contains plans for reducing and
ultimately eliminating individually compensated eradication, but needs realistic plans for controlling the
cultivation of new coca fields and for prosecuting those who plant them. The USG will work with the
government to try and ensure that 1998's eradication goals are achieved in a sustained, yearlong effort.
Alternative development programs in the Chapare will continue to provide assistance only to those who
sign agreements not to plant any coca and have substantially or completely eradicated their crops. The
USG will continue to work with the government in its efforts to pass and implement its judicial reform
package, cooperate with key officials to ensure that Law 1008 is not weakened, and urge that
ambiguities in the seized asset regime are resolved by passage of appropriate legislation.
Bolivia Statistical Tables [Excel file 23.3KB]
BRAZIL
I. Summary
Brazil continues to be a major transit country for illicit drugs shipped to the US and Europe. Brazil's
huge territory, including its relatively uninhabited Amazon region, provides traffickers with a large
selection of air, river, and road routes as well as maritime ports to transit illicit drugs. Working in close
cooperation with neighboring countries, the Brazilian government stepped up efforts in 1997 to disrupt
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the newest of these routes, a smuggler "air bridge" across western Brazil. Federal police seized 3.7 MT
of cocaine in 1997, a slight increase from the 3.1 MT seized in 1996. The counternarcotics department
of the Federal Police (DPF/DRE) continues to be understaffed and underfunded despite an increase in
activity by drug traffickers and the huge area police must cover to interdict this activity.
While not a major drug cultivation country, Brazil is a major producer of precursor chemicals and
synthetic drugs. Brazilian authorities expanded drug awareness and education programs in 1997. Several
key pieces of legislation, including an antimoney laundering law, continued to wind their way through
the Brazilian Congress. Brazil signed the 1988 UN Drug Convention in 1991 and endeavors to meet all
the goals and objectives of the convention. An omnibus counternarcotics law, which was approved by
the lower house of the Brazilian Congress (the House of Deputies) in December 1996 and which would
formally implement most aspects of the UN Drug Convention, remained stalled in the Brazilian Senate.
Brazil has a bilateral narcotics agreement with the US and, following a oneyear lapse, in September
1997 reinstituted a letter of agreement (LOA) providing for bilateral counternarcotics cooperation.
Brazil also cooperates bilaterally with several other countries and participates in multilateral
counternarcotics initiatives such as the UN Drug Control Program (UNDCP) and the Organization of
American States/AntiDrug Abuse Control Commission (OAS/CICAD).
II. Status of Country
Brazil is primarily a transit country for cocaine and other illicit drugs moving from cultivation areas in
Bolivia and Peru to processing laboratories in Colombia. It is also a transit point for processed drugs
such as cocaine hydrochloride (HCl) bound from neighboring countries to North America, Europe, and
domestic population centers. In recent years, Brazil's vast and largely uncontrolled western or Amazon
region has become an "air bridge" used by narcotics trafficker aircraft. An extensive Amazonian riverine
transportation network carries drugs to Atlantic ports for transshipment onward. This riverine network
also is used to transport precursor chemicals, many of which are manufactured in Brazil, to narcotics
processing laboratories upriver, primarily in Colombia.
In Brazil's southern region, a new overland and aerial drug transit route, dubbed by the news media as
the "rota de drogas," has developed along Brazil's border with Bolivia and Paraguay. From these
southern neighbors, illicit drugs pass to the Brazilian cities of Sao Paulo and Rio de Janeiro, and from
there to European and US ports.
Brazil's strict bank secrecy laws and its highly developed financial networks make the country fertile
ground for money laundering activity. The government submitted legislation in late 1996 to criminalize
money laundering and to establish an intelligence center to support prosecution of financial crimes.
After the bill remained stalled in Congress for nearly a year, the government included its provisions as
part of a package of emergency measures designed to cope with a growing financial and fiscal crisis.
The package, including the money-laundering bill, survived a "leadership vote" in the Chamber of
Deputies in November 1997. The Senate still must approve the measure before it becomes law.
The Brazilian government has asked its Congress to consider a law that would authorize the shooting
down, under certain conditions, of suspected drug smuggling aircraft flying over its territory. This
proposed "shoot-down" bill has been approved by the Chamber of Deputies and is under review in the
Senate. Brazil has already begun to put in place an Amazon Surveillance System (SIVAM) to provide an
integrated air and land-based radar system to detect trafficking and other illicit activity in the sparsely
populated Brazilian Amazon.
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Drug usage, primarily among young people, has increased in recent years. Abuse of such hard drugs as
crack cocaine continues to grow in Brazilian cities and even in some smaller towns along trafficker
routes. Sharing of needles by drug addicts is contributing to the spread of AIDS. Active drug demand
reduction projects, some benefiting from US funding, exist in several cities.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Brazil generally improved its counternarcotics posture in 1997, stepping up
interdiction and counternarcotics law enforcement activities in the Amazon region and along the
southern drug route and continuing several major investigations of narcotics trafficking groups. Despite
these new efforts, which resulted in numerous arrests, total Federal Police drug seizures were only
slightly above the relatively low level achieved in 1996.
Legal initiatives in the key areas of money laundering, narcotics trafficking, and omnibus
counternarcotics legislation made only slow progress in the Brazilian Congress. A new national defense
policy, inaugurated in late 1996, allows the military to defend national borders against organized crime
elements. While the policy does not specifically target counternarcotics operations, it has allowed the
military to assist police counternarcotics operations in the Amazon.
Inadequate staffing and resources continue to hamper activities by the counternarcotics unit of the
Federal Police. Another problem is insufficient coordination within the Federal Police and between
various agencies. There are indications that not all monies raised by the government's antidrug abuse
fund (FUNCAB) through precursor chemical license sales and narcoticsrelated property seizures are
being put into counternarcotics programs as intended.
Accomplishments. Two major police operations in the Amazon region netted numerous arrests and
seizures of both drugs and smuggler aircraft, and enabled police to put most clandestine airfields out of
action. During these operations, Brazilian authorities worked in close cooperation with those from
neighboring countries, a major step toward enhanced regional collaboration in fighting the drug trade.
While total federal cocaine seizures remained relatively low, police investigations disrupted several
major smuggling organizations and established the framework for greater success in 1998.
Illicit Cultivation/Production. Except for some cannabis cultivation primarily in the interior of the
northeast region, geared largely toward domestic consumption, there is no evidence of significant
cultivation of illicit drugs in Brazil. Authorities identified no commercial coca or opium cultivation in
1997 and, for the fourth year in a row, identified no cocaine processing laboratories. Brazil does produce
illicit psychotropic drugs, such as LSD and amphetamines, as well as anabolic steroids and such
"designer" drugs as Flunitrazepam (Rohypnol, the so-called "date rape" drug), which is smuggled to
Florida.
Distribution. Extensive domestic distribution networks have developed in major, and not so major,
metropolitan areas in Brazil. Federal counternarcotics police and state authorities have initiated ongoing
investigations of these networks with some success. One such operation in November 1997 led to the
arrest of several individuals, including the ringleader of the Sergio Roberto de Carvalho trafficking
organization. Two other cocaine smuggling networks were broken up at the end of 1997.
Sale, Transport, and Financing. In response to two major Federal Police operations (Porras I and Porras
II) in the Amazon region, drug traffickers appear to have reduced their activities temporarily. However,
due to a lack of resources it is questionable whether the police will be able to sustain their effort much
into 1998. Despite the Porras operations, the vast western region remains largely uncontrolled. This
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would not, however, stop the movement of drugs on the Amazon River. Some authorities maintain a
majority of the cocaine shipped down the Amazon is destined for the US. Manaus, the largest freshwater
port on the river, and Macapa and Belem on the Atlantic serve as transshipment points for drugs from
Bolivia, Peru, and Colombia to be switched to aircraft or ships bound for the US and other points.
Extradition. Brazil cooperates with other countries in the extradition of nonBrazilian nationals accused
of narcoticsrelated crimes. However, Brazil does not extradite its own citizens. The US and Brazil are
parties to a bilateral extradition treaty signed in 1961. In September 1997, Brazil's Supreme Tribunal
ruled that Mery Valencia, a Colombian national arrested in Rio de Janeiro in February 1997, could be
extradited to the US. Mery Valencia faces charges of conspiracy and intent to distribute cocaine in the
US in connection with the shipment of 20 to 25 tons of cocaine to the US from Colombia between 1986
and 1992.
Mutual Legal Assistance. The US and Brazil signed a bilateral mutual legal assistance treaty (MLAT)
during the visit of President Clinton to Brazil in October 1997. This treaty will support efforts by Brazil
to deal with narcotics trafficking and organized crime, as well as other offenses.
Law Enforcement and Transit Cooperation. Top Brazilian counternarcotics officials in 1997
expressed a strong interest in more active cooperation with the US in narcotics law enforcement and
interdiction activities. Signing of the bilateral LOA was a clear step in this direction. US Drug
Enforcement Administration (DEA) agents were invited to observe Federal Police operations in the
Amazon region, and information sharing with Brazilian authorities has progressed well. Additional
cooperation with authorities in Colombia, Peru, Bolivia, and, on occasion, Venezuela helped enhance
efforts in all five countries to obstruct the smuggler "air bridge." An organized crime bill, passed in
1995, gives the police added powers to combat criminal organizations involved in narcotics trafficking.
Major provisions cover bank secrecy, wire taps, controlled operations, plea bargaining, immediate
serving of prison sentences even while on appeal, and the formation of police task forces to combat
organized crime.
Precursor Chemical Control. Brazil, South America's largest producer of industrial chemicals, requires
registration with federal narcotics police for all production, transport, and distribution of potential
precursor chemicals. A 1995 law places 11 chemicals under control, sets minimum thresholds for
reporting and record keeping on transactions, provides for import and export licensing, and fixes
substantial administrative penalties for noncompliance. However, a lack of resources prevents active
government followup or verification of most shipments and/or their ultimate destinations, although
compliance appears to be widespread. Nevertheless, diversion of chemicals such as ether and acetone to
neighboring Colombia, Peru, and Bolivia occurs.
Demand Reduction. Brazil expanded its efforts at demand reduction in 1997. Policies focus both on
education, aimed primarily at young people, and treatment of drug abuse. Brazilian authorities, such as
the military police in Sao Paulo and other cities, are working closely with the US to carry out and
expand a mentoring program called PROERD (Programa Educacional de Resistencia a Violencia e as
Drogas), based on the American DARE (Drug Abuse Resistance Education) model. PROERD provides
training to uniformed police drug education volunteers in the states of Sao Paulo, Mato Grosso do Sul,
Paraiba, Minas Gerais, and Goias, and in November 1997 a group of PROERD mentors attended a
DARE conference in San Juan, Puerto Rico, with US support. A similar program in Rio was canceled in
1995, but most cities, including Rio, conduct drug awareness campaigns.
Law Enforcement Efforts. The Federal Police seized 3.7 MT of cocaine in 1997. This was slightly
more than the 3.1 MT seized in 1996. Marijuana (cannabis) seizures, on the other hand, were up in 1997:
nearly 30 MT, compared to just under 19 MT in 1996 and under 12 MT in 1995. Federal police
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destroyed a total of 2.86 million cannabis plants. Only federal seizure statistics are centralized.
Additional seizures, in some cases sizable ones, are made by state and local police.
The largest federal cocaine seizure of 1997 took place in March, when the Federal Police in Porto
Velho, Rondonia, seized 250 KG of cocaine and arrested five "mules" hauling the drugs by air. Police
believe the pilot of the aircraft dumped another 250 kg before police seized the load.
In its November 1997 raid on the Carvalho drug ring in southern Brazil, the Federal Police confiscated
239 kg of cocaine HCl, arrested four suspects, and confiscated a small aircraft. Carvalho, a retired
military police major, fled the scene but also was arrested several days later in Sao Paulo state. In the
latter half of December, Federal Police broke up two other trafficking rings, including one run out of
prison by a convicted drug smuggler.
The ongoing investigation and prosecution of the Saavedra Shapiama narcotics trafficking organization,
which operates in the triborder region near Colombia, Peru, and Bolivia, has so far resulted in nine
convictions (including Rolando Saavedra Shapiama, who was sentenced to four years and six months in
prison), four acquittals, and 13 fugitives. Federal police continue to investigate other members of the
group.
In May 1997, the Federal Police, with Interpol assistance, arrested Antonio Mota Graça, a major
Brazilian trafficker responsible for selling a large part of the Cali drug cartel's cocaine in and through
Brazil to international markets, and his commonlaw wife, Samia Haddock Lobo Mota Graça is currently
in prison completing a ten year, six month sentence from a prior conviction; he is expected to be
indicted on additional charges of corruption, illegal personal enrichment, bribery, possession of false
documents, and illegal weapons possession.
Ongoing Federal Police operations in the Amazon region have resulted in numerous arrests of Brazilian,
Peruvian, and Colombian drug traffickers, seizures so far of about two dozen smuggler aircraft, and
destruction of 16 clandestine airfields in the area. The operations are conducted in cooperation with
Brazilian Customs and Armed Forces, and have been closely coordinated with police in Colombia, Peru,
Bolivia, and Venezuela.
Corruption. The government of Brazil, as a matter of policy and practice, does not condone, encourage,
or facilitate the production, shipment, or distribution of illicit drugs or laundering of drug money; nor do
senior government officials engage in, encourage, or facilitate such activities. Pending legislation
targeting moneylaundering activity will also contain provisions to assist law enforcement in uncovering
and hindering official corruption.
Agreements and Treaties. Brazil became a party to the 1988 UN Drug Convention in 1991, although it
still lacks legislation formally implementing all of the provisions of the convention and outlawing
money laundering. While such legislation is needed to bring Brazil into full compliance with the
convention, in practice Brazil meets many of its overall goals and objectives.
Bilateral agreements based on the 1988 UN Drug Convention form the basis for counternarcotics
cooperation between the US and Brazil. Following the Brazilian Justice Minister's decision not to sign
the annual bilateral LOA with the US in 1996, Brazil did sign a new LOA in September 1997. Due to
the intervening lapse in the agreement and reallocation of the funds that would have gone to Brazil, the
level of US funding dropped from a planned $710,000 in 1996 to $400,000 -$350,000 for law
enforcement support and $50,000 for demand reduction activities-in fiscal year 1997. Brazilian
authorities have indicated they look forward to a renewed and very active program with the US under
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the new LOA. Cooperation includes interdiction and law enforcement programs, including police
training, and demand reduction programs.
Brazil also has bilateral narcotics control agreements with all its South American neighbors, and with
Germany and Italy. The Federal Police maintain liaison on counternarcotics matters with the US,
Germany, Great Britain, France, the Netherlands, and Italy through narcotics officers of those countries
posted to their embassies in Brasilia. Brazil has agreements facilitating extradition and integrating police
operations with its MERCOSUL partners (Argentina, Uruguay, and Paraguay) and participates in
counternarcotics programs sponsored by UNDCP.
IV. US Policy Initiatives and Programs
Policy Initiatives. US counternarcotics policy in Brazil focuses on working with the Brazilian
authorities to identify and dismantle international narcotics trafficking organizations, reduce money
laundering, and increase awareness of the dangers of drug trafficking and abuse. Assisting Brazil to
develop a strong legislative structure for narcotics and money laundering control and enhancing
cooperation at the policy level are key goals. Through bilateral agreements, providing for cooperation
between US agencies and the Federal Police, CONFEN (the Federal Drug Council), PROERD, and
other organizations, the two countries cooperate in counternarcotics programs. With the new LOA, there
is a current program in narcotics law enforcement, training, and drug awareness/demand reduction
education funded with international narcotics control funds.
Bilateral Cooperation. Due to the lack of an active LOA for most of 1997, bilateral cooperation
continued at a funding level much reduced from previous years. The new agreement signed in
September 1997 should improve cooperation in 1998.
Bilateral programs in 1997 included: a week-long regional money laundering conference in Brasilia
conducted by the US Internal Revenue Service with participants from all over South America; visits by
Brazilian prosecutors and police officials to US cities to observe model organized crime task forces; and
military and defense analysis exchanges and briefings aimed at providing a regional overview to the
threat posed by international narcotics traffickers. Brazilian state and Federal Police officers attended a
sixweek FBI counterterrorism bomb course in Louisiana while other Brazilian officers participated in a
refresher-training course held in Brasilia for graduates of the FBI National Academy. USG funding also
assisted Brazilian customs officers to attend regional training courses in Montevideo, Uruguay, while
Brazilian observers attended exercise "Fuerzas Unidas Counterdrug '97" at Camp Lejeune, North
Carolina.
The DEA observed Brazilian Federal Police counternarcotics operations in the Amazon region in the
latter half of 1997 and assisted with information sharing and facilitating cooperation with police
authorities in neighboring Colombia, Peru, Bolivia, and Venezuela. DEA is now working with Brazilian
customs, the Federal Police, and Sao Paulo civil police to institute a joint counternarcotics task force at
the Sao Paulo international airport beginning in January 1998. In 1997, the US provided some technical
and monetary assistance, although down from 1996 levels, for demand reduction programs in several
Brazilian cities and states.
Road Ahead. Highlevel Brazilian officials have expressed an interest and commitment to enhanced
bilateral cooperation in the fight against narcotics trafficking. The government of Brazil has
demonstrated an increased willingness to work closely with its neighbors in fighting the narcotics trade.
The US and other countries will look to Brazil for an even greater commitment in the future. Clear
indications of this commitment would include passage of omnibus counternarcotics and money
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laundering legislation, highlevel administrative attention to counternarcotics efforts, increased funding
of counternarcotics programs and law enforcement agencies, and a sustained interdiction effort in
regions most exploited by international narcotics traffickers.
Brazil Statistical Tables [Excel file 13.1KB]
CHILE
I. Summary
Chile is not a center for the production of illegal drugs. Partly because of its geographic isolation, it has
until recently avoided many of the problems created by illegal narcotics in other South American
countries. This situation is changing as drug producers utilize Chile as a source of precursor chemicals
and for transshipment of drugs to the US and Europe. Chile's proximity to producer countries, its
dynamic economy, and a relatively developed banking system make it susceptible to money laundering.
Corruption receives increasing public attention, but is not generally drug-related. Drug use, previously
limited to the lower classes, has become more prevalent in the upperincome neighborhoods and offices
in Santiago. The highly publicized cases of narcotics traffickers Carlos Mario Silva Leiva ("Cabro
Carrera") and Amado Carrillo Fuentes during 1997 made Chilean citizens and the Government of Chile
(GOC) increasingly aware of the threat of narcotics trafficking and corruption. These cases stimulated
efforts to counter drug smuggling and related criminal activity. Chile is a party to the 1988 UN Drug
Convention.
II. Status of Country
Chile remains a significant source of precursor chemicals and a transshipment country for cocaine
products, although there are recent reports of cocaine processing labs being established along the
Chile/Bolivia border. A 1995 counternarcotics law criminalizes illicit association, traffic in precursor
chemicals, and money laundering, and permits wire intercepts, undercover operations and defendant
cooperation. Availability of resources remains a limiting factor in Chilean counternarcotics
investigations and enforcement despite an increasing budget. Chile is not a drug producing country
except for a small amount of cannabis grown for domestic consumption; this is unlikely to change.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Chile played a leading role in the October 1996 InterAmerican Drug Abuse Control
Commission (CICAD) meeting in Buenos Aires that approved the hemispheric counternarcotics strategy
called for by the Miami Summit of the Americas. In October 1997, Chile hosted a CICAD experts
meeting on money laundering that developed proposals to bring CICAD's model regulations into
harmony with the Buenos Aires plan. In November 1997, the GOC hosted a conference on "policies and
technological applications to control drugs and psychotropic substances." During 1997, the Chilean
Council for the Defense of the State (CDE) and the US Financial Crime Enforcement Network
(FINCEN) implemented an agreement to exchange financial crimes investigative data. With the support
of Chile's Congress, the Secretary General of the Presidency is implementing a national intelligence
system to provide a central point for counternarcotics information. Initiatives in 1997 by public
institutions such as the Chilean National Drug Control Council raised public awareness of the dangers of
drug abuse, which had the effect of enhancing prevention and rehabilitation efforts.
Accomplishments. In April 1997, Carlos Mario Silva Leiva, AKA "Cabro Carrera," was arrested along
with 22 others for conspiracy to traffic in cocaine (from South America to Europe) and money
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laundering. Assets seized in Chile and Europe totaled $100 million from this case. This represented the
first major interagency success under the 1995 counternarcotics law. Following the August 1997
revelation that the late Mexican Juarez Cartel druglord, Amado Carrillo Fuentes, had resided in Chile for
several months, Chilean authorities moved quickly to make arrests and seize related assets. Their
cooperation with US authorities on investigations in both Chile and the US contributed to the freezing of
tens of millions of dollars in US bank accounts. In September, President Frei signed a judicial reform
law creating an attorney general and related ministry that will be in full operation by 2003. The reform
converts the judicial system from an inquisitorial to an adversarial system and is expected to increase
investigative and judicial expertise in counternarcotics prosecutions and to facilitate extraditions. Chile
continued to cooperate closely with neighboring countries to control diversion of precursor chemicals
into narcotics production.
Law Enforcement Efforts. Chilean police seized 279 kilos of cocaine hydrochloride (HCl), 1,259 kilos
of cocaine base, and 485 kilos of marijuana in 1997. An increase in cocaine base seizures may indicate
an increase in trafficking of this material in Chile; it also demonstrates the increased priority assigned to
police counternarcotics efforts. Authorities continued to investigate moneylaundering cases; however,
no prosecutions were successfully concluded.
Corruption. The corrupting influence of drug money is seen on occasion in the lower levels of the
police and judiciary. There is no evidence that any senior GOC official engages in drug production,
distribution, or money laundering. Where police officials have been accused of involvement in
narcoticsrelated incidents, the institutions have taken steps to investigate the allegations.
Agreements and Treaties. The Chilean Foreign Ministry is attempting to modernize Chile's extradition
treaties with various countries. The United States' bilateral extradition treaty with Chile (signed in 1901)
needs to be updated. Chile and the US also have an agreement to exchange financial crimes investigative
data. As a party to the 1988 UN Drug Convention, Chile continues to work towards compliance with its
goals and objectives through its 1995 drug law. Chile is also a party to the 1961 UN Convention, the
1972 Protocol thereto, and the 1971 UN Convention. Chile also has counternarcotics cooperation
agreements with the United Kingdom and the European Union.
Cultivation/Production. Chile's climate and geography are not conducive to the production of illegal
drugs, although a small, lowquality marijuana crop is grown and sold on the domestic market. Outside
groups are not known to use Chile as a base for production of cocaine, heroin or other narcotics.
Drug Flow/Transit. Northern Chile continues to be a transit zone for bulk shipments of precursor
chemicals to and narcotics from neighboring producing countries. The length and ruggedness of Chile's
eastern border, its 3,928 miles of coastline, and the extensive commerce in fruit, wine, frozen seafood,
and minerals through more than ten deepsea ports make Chile an attractive location for transshipment of
narcotics to the US, Europe, and Asia. Due to treaty restrictions, Chilean authorities cannot open or
inspect shipments originating in Bolivia and in transit to third countries. Considerable trafficking via
such shipments may be taking place, although there is no indication that significant quantities of such
shipments end up in the US
Domestic Programs (Demand Reduction). While narcotics consumption levels in Chile are quite low
(most surveys reveal a drug-use rate of under five percent), public attitudes and government budgets
reflect rising concern and an urgent desire to reduce demand and prevent abuse. The GOC doubled the
1997 budget of the National Drug Control Council (CONACE), the primary Chilean government entity
responsible for drug demand reduction, and strengthened laws punishing consumption. Nongovernmental organizations (NGOs) are active in drug rehabilitation and education activities. All
Chilean schools, both public and private, incorporate formal drug education classes, most of which are
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designed and implemented by NGOs.
The GOC continues to devote significant resources to demand reduction. In 1996, CONACE established
a "national project bank" to fund community-level demand reduction projects. It received 450 million
pesos (approximately $1.1 million) for 1997, and CONACE anticipates significant future increases in
project funding. The National Youth Institute distributed over 1,200 million pesos (approximately $2.9
million).
IV. US Policy Initiatives and Programs
The USG continues to support the implementation of effective moneylaundering and precursor chemical
controls, as well as investigation, interdiction, demand reduction, and rehabilitation. Funds for this
purpose totaled $37,400 in 1997.
Road Ahead. The GOC has consistently indicated that its top priority is training of existing law
enforcement officers, prosecutors, magistrates, and the private sector in interdiction, control and
prevention. The USG will seek to provide appropriate training through the joint efforts of the State
Department (INL), DEA, FBI, USIA and Customs. In addition, INL funding from prior bilateral
narcotics memoranda of understanding will be used to purchase secure communications capability for
the Council for the Defense of the State. In 1998, the US Embassy expects to sign a memorandum of
understanding with the GOC establishing a Joint Information Coordination Center (JICC) in Chile.
COLOMBIA
I. Summary
In 1997, Colombia remained the world's leading producer and distributor of cocaine and an important
supplier of heroin to the US. Eradication of coca and opium poppy improved significantly with
assignment of greater aviation resources, despite continued incidents of hostile ground fire.
Nevertheless, according to USG surveys, coca cultivation outside of the spray zones increased.
On several levels the Colombian government (GOC) made progress against narcotrafficking. It passed
legislation to increase prison sentences for drug-related crimes and improved its existing anti-money
laundering statute. It also began to take action against a new generation of narcotics traffickers,
sentencing former government officials for narcotics corruption and continuing counterdrug law
enforcement efforts (at times in cooperation with the military,) as well as making large scale seizures of
narcotics and trafficker assets.
Problems persist, however, because of narcoticsrelated corruption, an underfunded and inadequate
judicial system, and a lack of adequate political will on some issues in both the executive and legislative
branches. Resources assigned by the GOC to combat narcotics remain meager compared to the needs of
police and military forces who face the threat of drug traffickers, guerrilla elements, and paramilitaries
involved in many aspects of the drug trade.
II. Status of Country
Three quarters of the world's annual yield of cocaine HCl is produced in Colombia, both from cocaine
base imported from Peru and Bolivia, and from locally grown coca. Colombia saw a net 18 percent
increase in coca cultivation in 1997 from 1996, primarily outside of the crop spraying areas. This,
combined with crop reductions in Bolivia and Peru, makes Colombia the world leader in area of coca
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under cultivation. Colombia is also an important supplier of heroin to the US. According to USG
estimates it can potentially produce six metric tons (MT) of heroin yearly, virtually all of which is
destined for the US market.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The GOC's five-year national anti-narcotics plan of 1995 met the strategic plan
requirements of the 1988 UN Convention. It defines ten policies for action over five years to attack the
narcotics problem in the areas of judicial and law enforcement institution building, alternative
development, prevention, rehabilitation, and international cooperation. In 1997 the National Directorate
on Drugs (DNE) initiated an effort to update the national plan.
In the wake of the US decision to decertify Colombia once again in March 1997, the USG presented the
GOC with five criteria, on the basis of which-if the GOC made significant progress-the US could
consider reversing the 1997 decertification. The criteria and the evaluation of the GOC's performance
follow:
Application of a more effective, safe, reasonably priced granular herbicide against coca.
In June, the GOC approved the testing of a more effective granular herbicide, tebuthiuron, an EPAapproved substance widely used in the US. Due to problems largely outside the GOC's control, the
testing phase has been delayed. In the meantime, the Colombian National Police (CNP), responsible for
eradication, began to employ chemical additives to increase the effectiveness of the herbicide now in
use.
Introduction and/or full support of legislation to repeal article 35 of the constitution, to enable the
extradition of Colombian nationals, including the four Cali mafia kingpins.
Although the bilateral extradition treaty between the US and Colombia, signed in 1979, is in force as a
matter of international law, in 1997 Colombia continued to decline to enforce the treaty. The GOC cited
the absence of internal legislation needed to render it applicable under domestic law and the 1991
constitutional prohibition against extradition of Colombian nationals (Article 35). Extraditions of nonColombian nationals occur pursuant to the Colombian penal code.
In May 1997, the Colombian Congress began the lengthy process to repeal the Article 35 prohibition
against the extradition of Colombian nationals. Continual delaying tactics engineered by those opposed
to extradition marred the process, as did charges of bribes and threats to Congress members from
narcotrafficking interests. In order to restrict the application of extradition, certain legislators repeatedly
tried to include provisions such as barring the retroactive application of the treaty to offenses committed
before its entry into force. At times, the GOC's precise position on retroactivity was not clear, while its
lobbying efforts were publicly criticized as weak and ineffectual. In the end, however, the GOC
officially supported the approval of an unrestricted extradition bill.
On November 26, an overwhelming majority of the lower house of the Colombian Congress voted to
repeal the Article 35 ban on extradition, but adopted an accompanying measure that forbids retroactive
application to offenses occurring prior to the effective date of the repeal. This provision would, in effect,
insulate the Cali kingpins and other notorious international criminals from extradition for crimes
committed before that date. The Colombian government is seeking a ruling of the Constitutional Court
to have this non-retroactive provision removed.
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The United States is also concerned that the non-retroactivity of the extradition amendment will be
applied to non-Colombian nationals. If the amendment covers foreign fugitives (the Government of
Colombia says it does not), Colombia could become a haven for international criminals. On December
18, the Constitutional Court was asked to rule on the constitutionality of the bill in response to several
legal experts' opinion that Congress committed procedural errors in the process. The Court's decision is
still pending.
Full and effective implementation of laws on asset forfeiture, money laundering and sentencing, and of
the agreement to suppress illicit maritime traffic, especially the detection and monitoring provisions.
In February 1997, the GOC signed into law an important piece of counterdrug legislation: penalty
enhancement for narcotrafficking crimes, combined with a strengthened anti-money laundering criminal
statute. Money laundering has been a crime under Colombian law since 1995. The penalty enhancement
law provides for a maximum 20-year prison sentence for drug trafficking and reduces, but does not
eliminate, sentence reductions for voluntary surrender and other forms of cooperation. Taken as a whole,
the law in Colombia still provides for drug sentences that are lenient by international standards.
Though money laundering has been a crime under Colombian law since 1995, there have been no
successful prosecutions under the statute. Colombia has prosecuted some individuals under a separate
statute for "illicit enrichment" and has fined some financial institutions for failing to comply with the
cash transaction reporting requirements. In February 1997, as part of the bill discussed above, the
Colombian Congress increased penalties for money laundering connected with drug trafficking. The
money laundering statute includes penalties of up to $50,000 for individuals and USD two million for
institutions, in addition to possible prison sentences of 6 - 15 years.
As a result of the more stringent legislation, the Colombian banking system strengthened "know your
customer" rules to monitor large and/or suspicious transactions. Banks are now required to maintain
records on significant transactions and to report regularly on "questionable" transactions. The Bank
Superintendency, the GOC banking regulatory body, announced in September that it will impose
tougher sanctions on banks that violate its reporting and tracking requirements. At the same time,
ASOBANCARIA, the Colombian bankers association, has been very cooperative with the USG in
closing accounts of, and refusing to open new accounts for those individuals and companies on the
USG's "Specially Designated Narcotics Traffickers (SDNT)" list. This list was prepared under Executive
Order 12978 of October 1995, which blocks the US-based assets of and prohibits financial transactions
with significant drug traffickers.
As of September, more than 20 banks were under investigation by the Prosecutor General's office for
money laundering and one Cali bank manager had been arrested for money laundering. According to the
GOC, however, no person or institution has yet been convicted for violation of the new law. The GOC
says that bank inspectors are still in the process of evaluating compliance, that they lack sufficient
supervisors and inspectors to do the job, and that the GOC requires assistance from the USG to
implement the law. The USG has offered courses on the investigation and prosecution of money
laundering crimes and asset forfeiture to the prosecutor general's office and other components of the
GOC.
The GOC has expressed support for the creation of a financial intelligence unit, but the Colombian
Congress defeated a bill authorizing such a unit in late 1996 and no new bill was introduced in 1997.
The GOC has also expressed interest in observer status in the Caribbean Financial Action Task Force
(CFATF), but has not committed to subscribing to CFATF objectives or undergoing an evaluation. In
general, more aggressive enforcement of the new money laundering statute, to include the application of
sanctions, is needed.
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On asset forfeiture, CNP, DAS, and DNE officials did a commendable job in 1997 seizing drug
traffickers' assets. Multi-million dollar seizure operations took place against current and former major
traffickers and their relatives, such as Pablo Escobar, Ivan Urdinola, Pastor Perafan, Jose Santacruz
Londono, and the Ochoa family. Currently some 40 forfeiture cases are pending in the DNE and the
Prosecutor General's office, many involving top narcotraffickers. However, the procedures for final
forfeiture of assets under the new law have not yet been implemented. At least five major and several
other lesser government entities are involved in the process and coordination among them is at an early
stage of development. As a result, substantial quantities of the trafficker assets initially seized have now
been ordered returned and none have been finally forfeited to date.
Several legal challenges were filed against the asset forfeiture law soon after it was passed. Only in
August did the Constitutional Court uphold the law and issue its ruling that the retroactivity provisions
are constitutional. The Colombian Congress has yet to pass an international asset forfeiture cooperation
provision to bring Colombia's asset forfeiture regime in line with 1988 UN Drug Convention standards.
0n February 20, the GOC signed a maritime shipboarding agreement with the US, another very
important counterdrug policy goal achieved during 1997. The agreement allows for improved timeliness
in the approval process for shipboardings in international waters and sets guidelines for improved
counterdrug cooperation with the Colombian Navy in communications and tactical information
exchange. One critical aspect of the agreement is detection and monitoring of suspect craft, an area in
which the Colombian Navy has significantly improved its performance. As a result of the Colombian
Navy's implementation of the agreement, there is improved Navy participation with US forces in
maritime drug seizures. There has been a problem with final disposition of the maritime cases
prosecuted in Colombia. The Navy, however, along with the other services, was hobbled by sizable
budget cuts in 1997. Consequently, its ability to purchase fuel, weapons, and equipment specifically to
support counterdrug operations was diminished. Additionally, despite the pressing threat to Colombian
security from narcotics trafficking, the Navy continues to emphasize the hightech capability of its blue
water forces over its counterdrug capability.
With regard to sentencing, no major drug trafficking cases came up for sentencing during 1997.
However, a few wellknown drug traffickers were sentenced for nonnarcotics crimes such as kidnapping.
There were also several high profile sentencings of former government officials for illicit enrichment.
On December 4, the lower house of the Colombian Congress passed a penal reform bill, with apparent
GOC support, which would permit release of all prisoners except kidnappers upon serving 60 percent of
their sentence. Following public outcry and US expression of concern, the GOC ceased its support and
the measure was substantially modified in the Colombian Senate. The bill, as passed by the Senate and
agreed to in conference with the Chamber of Deputies, excludes narcotics traffickers, those convicted of
illicit enrichment and several other categories of dangerous criminals from eligibility for early release. It
does, however, permit all those who have served 80 percent of their sentences to spend up to 60 days a
year on unsupervised "leave" from prison, subject to the approval of prison supervisors. The GOC
responded by directing prison supervisors not to approve such "leave" for the same categories of
criminals excluded from early release.
Bringing corrupt officials to justice.
During 1997, several high profile former government officials accused of narcoticsrelated crimes were
brought to justice. For example, in August, the former president of the Chamber of Representatives was
sentenced to five years in prison for illicit enrichment, as a result of having received money from drug
kingpin Miguel Rodriguez Orejuela. The mayor of Cali was sentenced to 70 months for illicit
enrichment, while the city's former comptroller and a onetime governor was sentenced to six years in
prison for the same offense. President Samper's campaign administrator received a 78month sentence for
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illicit enrichment on behalf of third parties and his former Attorney General was sentenced to eight years
for illicit enrichment. Several former members of Congress were convicted of illicit enrichment during
1997 as well, while other former and current legislators came under investigation for drugrelated
offenses. Several other important cases were dismissed by the new Prosecutor General. Rampant highlevel corruption in the GOC and the Colombian Congress continues to be a serious problem, and the
great majority of corrupt officials continue to act with impunity.
Tightening prison security.
In April, the CNP assumed control of the maximum security wings of Colombia's major prisons. This
was a positive development in terms of prison security as corruption and lax security practices marked
the administration of the National Prison Institute (INPEC). Police have cracked down on privileges
afforded kingpins and have more carefully controlled visitors, telephone calls, and packages. In June,
police reported disrupting a communications center in one maximum security prison used by imprisoned
traffickers, including the Rodriguez Orejuelas. The US Embassy has heard fewer reports of traffickers
carrying out their illicit business activities with impunity from their cells, but there are still indications
that drug kingpins maintain some ability to operate their criminal enterprises and exercise influence
from prison.
Unfortunately, INPEC named an acting director during summer 1997 who, during her brief tenure,
relaxed some of the controls the CNP had established, allowing the drug kingpins special privileges the
CNP had revoked. By November, however, INPEC named a wellqualified, highly regarded permanent
director who is expected to restore the tight controls in the maximum security wings which house the top
traffickers.
At the request of the GOC, the US Bureau of Prisons provided information and specific
recommendations on improving Colombia's maximum security facilities, many of which are either
already funded or require little additional funding, which have yet to be implemented by the Justice
Ministry.
Accomplishments. Apart from achievements related to the certification criteria outlined above, the
following highlight other counterdrug accomplishments in 1997:
In June the GOC instituted a civil aviation control program requiring that all civil aviation aircraft under
10,000 kilograms be inspected annually by the CNP. Illegal or improperly documented aircraft or
unauthorized alterations to the aircraft (long range fuel tanks, etc.) now result in immediate seizure.
The CNP has formed several new special investigative units focusing on long term investigations of
trafficker organizations and on asset forfeiture.
The CNP participated in the creation of a joint US/Colombian heroin task force that has provided
intelligence to effect drug seizures in Colombia and assist in USbased investigations.
Overall, CNP seizures of cocaine and heroin were higher in 1997 than 1996.
In 1995, the GOC established as a top priority the eradication of illicit crops within two years. While the
CNP did not meet that goal, partly because of a continued increase in new coca under cultivation outside
of the spray zones, the total numbers of hectares sprayed in the CNP eradication program increased in
1996 and again in 1997.
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Spray operations are increasingly hazardous due to the need to fly at low altitude coupled with the threat
of hostile ground fire. A total of 94 aircraft were hit by hostile fire in 1997, 51 of them while involved in
or supporting spray operations. Nevertheless, the CNP pressed hard in 1997 to meet and exceed their
spray goals, assigning more pilots and aircraft to the program.
The GOC approved the National Alternative Development Plan (PLANTE) in October 1994 as part of
the National Development Plan and National Drug Control Plan. According to the 19951998 plan,
PLANTE intends to substitute approximately 30,000 hectares of illicit crops. PLANTE operates with a
$300 million budget over a four-year period, half from the international community. The GOC has only
obtained $4.7 million from international donors, not including a $94 million loan from the International
Development Bank (IDB). Two and half million dollars will come from a new UNDCP-assisted project
beginning in January 1998 aimed at strengthening agencies responsible for implementation of the
alternative development plan. In the absence of monitoring and evaluation systems, PLANTE's impact
cannot yet be assessed.
Military-police counterdrug cooperation continued during 1997, but was, for the most part, dependent
on CNP requests for assistance and military ability to meet those requests. In most cases cooperation
took the form of multiday deployments in areas where police felt under a significant guerrilla threat. The
army, navy, and marines supported the CNP in joint counterdrug operations along the Peruvian and
Brazilian borders in a major regional effort in 1997. The Colombian Air Force continues to attempt,
with limited success, to track and force down trafficker aircraft. The military also undertook independent
counternarcotics operations in 1997 in order to deprive their primary target, the guerrilla forces, of a
source of financing. The CNP suffered 17 casualties (6 killed, 11 wounded) in 1997 during
counternarcotics missions.
CNP counternarcotics operations in 1997 resulted in:
the seizure of 34 metric tons (MT) of cocaine HCl and 10 MT of cocaine base, 261 kg of
heroin/morphine, and 136 MT of marijuana, 15 vehicles, 5 boats, and 1 aircraft;
the destruction of 213 cocaine base and HCl labs and 9 heroin labs;
the capture of over 20,000 kg of solid precursor chemicals and over 40,000 gallons of liquid precursors;
and
the arrest of 1,542 persons.
The CNP also provided information that led directly to the seizure of 4.5 MT of cocaine HCl in transit to
Mexico and/or the US (these figures to be supplied.). CNP cooperation with international law
enforcement entities, including intelligence sharing, was excellent.
Agreements and Treaties. Colombia ratified the 1988 UN Convention in September 1994, albeit with
important reservations and understandings on extradition, maritime cooperation, and money laundering.
In December 1997, Colombia dropped its reservation on extradition. The GOC cooperates with the
United Nations' local representative and the UNDCP in implementation of the convention. Colombia
also participates in joint projects involving international mutual legal assistance and control of money
laundering and precursor chemicals.
Colombia signed a precursor chemicals agreement with the European Union on December 18, 1995, and
is party to a memorandum of understanding (signed July 1990) with the US on asset sharing which is
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not in force. A February 1991 "declaration of intent" on evidence sharing with the USG has remained in
suspension since 1994 because of GOC failings that resulted in case dismissals, inappropriately lenient
sentences, and harm to families and friends of USGprovided cooperating witnesses.
The GOC signed counterdrug cooperation agreements with Russia and Brazil during 1997 and a
maritime shipboarding agreement with the US (see above).
Cultivation and Production. Coca and opium poppy are the principal illicit drug crops grown in
Colombia. Coca, the predominant illicit crop, is grown chiefly on the eastern plains in Guaviare and
neighboring departments and along the Ecuadorian and Peruvian borders in the departments of
Putumayo and Caqueta (hereafter referred to as the source zone). Overall new coca cultivation outside
the spray zones is estimated to have increased over 1996. Most opium poppy is grown on the eastern
slopes of the Central Cordillera mountains in Tolima, Huila, and Cauca departments, and, to a limited
extent, in North Santander and Antioquia departments.
Larger and ever more complex cocaine HCl laboratories are replacing the less sophisticated base labs
previously encountered. Most opiate laboratories are small, producing small quantities of drugs and
using simple equipment and limited quantities of precursor chemicals.
Colombia accounts for less than an estimated two percent of the world's opium production. Persistent
eradication has kept Colombia's opium poppy crop from expanding overall cultivation. Cultivation
levels have remained stable for the third straight year.
Marijuana cultivation remained active in 1997, but is not believed to have increased significantly.
(Seizures of Colombian marijuana in the US are minimal, although significant seizures were made in
Europe during 1997.)
Yields. Coca. For the past several years, a yield of 800 kg of leaf per hectare has been used. With the
introduction of other varieties of coca to Colombia, that figure is under review and may be revised. Five
hundred kg of leaf in turn produces one kg of cocaine base and one kg of base equals one kg of cocaine
Hcl. Poppy: One hectare planted with opium poppy, harvested three times per year, will produce about
ten kg of opium which in turn will produce about one kg of heroin.
Drug Flow/Transit. Colombia is the center of the international cocaine trade, with drugs flowing out of
the country at a stable and constant rate. Colombian traffickers import cocaine base from Peru and, to a
lesser extent, from Bolivia primarily by air, but with increasing frequency by water. The base is
converted (along with locally produced base) into cocaine HCl at clandestine laboratories in the
Colombian source zone. Cocaine HCl shipments move out of Colombia by sea (multiton loads) or by
general aviation aircraft (400800 kg shipments) to Mexico, Central America and the Caribbean. Cocaine
is also concealed in legitimate air and sea cargo destined for the US and European ports.
Almost all of the heroin produced in Colombia is destined for the US. According to DEA data, in 1996,
52 percent of heroin (based on net weight) seized and analyzed by Federal authorities in the United
States was of South American origin. It is important to note, however, that the Heroin Signature
Program, on which these figures are based, is not a direct measure of US market share by heroin source
of origin. Heroin is generally imported by human couriers on commercial airline flights.
Domestic Programs (Demand Reduction). The DNE administers cost-sharing drug abuse prevention
and education projects with the UNDCP. The European Union (EU) provides most of its demand
reduction assistance to Colombia through UNDCP. In 1996, the EU contributed about 20 percent ($3.7
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million) of the UNDCP Colombia program budget.
The DNE coordinates GOC demand reduction programs through governmental and nongovernmental
organizations. Priority target groups for prevention programs on the use of psychoactive substances
include males ages 1217 who are studying and whose level of education is high school. New users are
found in the areas with the highest population density and where economic development is greater.
These include the coffee producing regions and the areas surrounding large cities such as Bogota,
Medellin, and Cali.
IV. US Policy Initiatives and Programs
Policy Initiatives. The USG stresses institution building, primarily within law enforcement institutions
and the judicial system. The United States is also seeking to strengthen multilateral cooperation with the
hemisphere on counternarcotics.
Bilateral Cooperation. USG agencies, including DEA, FBI, USAID, and training elements of the
Department of Justice, work with GOC law enforcement and judicial entities to increase the
effectiveness of the Colombian judicial system. They assist in developing and refining law enforcement
capabilities, training host nation counterparts, and improving access, fairness and public perceptions of
the justice system. For example, over 3,100 magistrates and prosecutors were trained in 1997. Training
has had uneven results.
In 1997, through letters of agreement (LOA) between the USG and the CNP's counterdrug directorate
(DANTI), the USG provided $31 million for support of counternarcotics operations. The USG and GOC
also signed a memorandum of understanding in 1997 that establishes appropriate safeguards designed to
prevent use of such aid by military or police units linked to human rights violations. The CNP project
enhances the institutional and tactical capabilities of the DANTI to conduct aerial eradication of illicit
crops and interdiction of the finished product. In 1997, the USG provided training for antinarcotics
aviators, mechanics, and logisticians. It also provided parts and fuel to the antinarcotics air wing, which
composed of 56 helicopters and 17 fixed wing aircraft, including one CNP-owned T-65 Turbo Thrush
spray aircraft. The USG also provided ten T-65 spray aircraft, five OV-10 Bronco spray aircraft, and 12
US helicopters, along with instructor pilots and technical advisers in support of aerial eradication. In
1997 the total number of CNP students trained was 153 (81 for ground training, 41 pilots, and 31
technicians.)
The Colombian government has cooperated closely with the United States in promoting stronger
multilateral cooperation throughout the hemisphere on counternarcotics. Colombia has publicly, as well
as privately supported the creation of a Multinational Counternarcotics Center in Panama and the
strengthening of OAS mechanisms for such cooperation.
To reduce the amount of cocaine HCl reaching the US, many USG programs in the region will focus on
the Colombian source zone to stop air transportation and drug production in this targeted area. This
initiative is designed to improve both bilateral and joint CNP-military operations, as well as cross border
cooperation.
The Road Ahead. USG resources will continue to support Colombia's efforts to sustain and improve the
capability and efficiency of the judicial system, one of the weakest links in the counterdrug chain, and to
attack the major narcotics trafficking organizations. We expect to see progress in the implementation of
asset forfeiture and money laundering legislation. Extradition of Colombian nationals, however, appears
to be nearly resolved, pending the Supreme Court decision on retroactivity. The extradition of
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Colombian nationals may now be possible, but, unfortunately, not for crimes committed before the
passage of the current legislation. The GOC still needs to enact implementation legislation to make the
US/Colombia Treaty enforceable. Since such legislation will provide an opportunity for insertion of
further restrictions on extradition, the USG will continue to urge the GOC to keep this from happening.
The USG will stress further development of investigative and prosecutorial abilities, international asset
forfeiture provisions, improves prison security, money laundering controls, air and coastal interdiction
(to include internal aircraft controls), and infrastructure development. Better and stronger laws are
needed to increase traffickers' sentences and specifically to cover criminal enterprises. The USG will
also press the GOC to provide more adequate budgets for those elements of the police and military
involved in counternarcotics efforts. The aerial eradication program should gain momentum as the USG
provides more and better technical assistance and aircraft, and the GOC moves to approve the use of an
effective granular herbicide.
We expect effective cooperation to continue in efforts to curtail the flow of narcotics. We must intensify
these efforts despite the drawbacks of a weak political leadership in its final year and the distractions of
the 1998 presidential campaign. The most immediate threats include endemic corruption, a weak
judiciary and the physical risk from the guerrillas who violently oppose police eradication and
CNP/military interdiction efforts as they threaten a source of financing for the guerrillas. Increasingly
violent paramilitary groups, many of which are believed to have connections to drug traffickers, also
pose a threat to our joint efforts. The violence associated with the drug trade, coupled with the violence
generated by these twin threats and the weak, ineffective leadership of the Samper government have
severely hampered our efforts in the recent past. If they are allowed to grow unchecked, they could, in
an atmosphere of declining respect for law and waning adherence to the institutions of civil society,
represent a genuine threat to Colombian democracy.
Colombia Statistical Tables [Excel file 25.9KB]
[end of document]
Click here for continuation of South America
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information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
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NOTE: External links to other Internet sites should not be co
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International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
CANADA, MEXICO
AND
CENTRAL AMERICA
BELIZE
I. Summary
Belize is a significant drug transit country. The Government of Belize (GOB) recognizes the problem of
drug transit through its territory and the effect drug trafficking has on domestic crime. The Belize Police
Force (BPF) and the Belize Defense Force (BDF) are active in the fight against drugs and cooperates
with the USG. The GOB seized record amounts of cocaine in 1997. This improved performance,
however, was tempered by the mixed record of convictions and sentencing. The efforts of the GOB's
security forces to control drug trafficking have been hampered by the lack of manpower, training and
equipment, corruption within the ranks, and the relatively large expanse of uninhabited territory of the
country.
The GOB also was unable to complete negotiations on a new Mutual Legal Assistance Treaty (MLAT)
or extradition treaty. Although the GOB and the USG reached tentative agreement on a new extradition
treaty and a MLAT in late 1996, the GOB subsequently raised new concerns about certain aspects of
these treaties and negotiations were stalled during 1997. The GOB is party to the 1988 UN Drug
Convention.
II. Status of Country
Contiguous borders with Guatemala and Mexico, large tracts of forested land, an unprotected coastline,
numerous cays, and inland waterways, large unpopulated jungle and coastal areas and a rudimentary
infrastructure for combating drug trafficking and drug abuse present the opportunity for potentially
significant transshipment of illicit narcotics.
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III. Country Actions Against Drugs in 1997
Policy Initiatives. With USG help, the GOB continued to work to upgrade the professionalism and
equipment of the BPF to combat violent crime and narcotics trafficking. The GOB has continued its
support of cooperative efforts to reduce drug trafficking through its borders and to combat the crime
associated with such trafficking. The GOB has maintained its support of regional and unilateral
counternarcotics efforts.
Though the GOB does not allow aerial eradication of marijuana, it continues to actively cooperate and
encourage aerial reconnaissance missions. Such missions are followed by BPF and BDF manual
eradication of marijuana fields and seedlings. Indications are that marijuana cultivation has remained
stable.
Accomplishments. In 1997, Belize experienced a record year for cocaine interdiction with more than
two metric tons seized. Antinarcotics activities are centralized in a committee consisting of various
components of the BPF and the BDF, with a dedicated group of investigative police and a rapid
response forced called the Dragon Unit. With the advent of a new Commissioner of Police, these rapid
response forces became operational. A new twoofficer moneylaundering unit has recently completed
training with USG support.
Illicit Cultivation/Production. There is no evidence of production of drugs other than marijuana in
Belize. Illicit cultivation of marijuana continues to occur in Belize, but at reduced levels from the
widespread cultivation of a decade ago when Belize ranked fourth in worldwide production. The BDF
routinely conducts manual marijuana eradication efforts involving modestsize fields.
The GOB does not support the use of aerial spray missions for the eradication of marijuana fields based
upon environmental concerns, but it performs aerial reconnaissance operations when available. There is
no evidence of traffic in precursor or essential chemicals in Belize. Nevertheless, the GOB, in support of
the UN Convention on Psychotropic Drugs, developed a precursor chemical program. There are almost
no industries in Belize requiring the use of precursor chemicals.
Money Laundering. Money laundering remains a potential threat in Belize. The 1996 Moneylaundering Prevention Act criminalized moneylaundering and imposed reporting and recordkeeping
requirements on banks and nobank financial institutions regarding large currency transactions and
suspicious financial activities. Although this Act provides for international cooperation and the freezing
and forfeiture of assets for all crimes, law enforcement authorities have yet to seize any assets or try a
single case using this new law.
The GOB has been building an offshore services sector since 1992. The Central Bank of Belize (CBB)
has received numerous inquiries about offshore banking licenses, and CBB officials have requested
USG assistance in their due diligence investigations when American companies or individuals are
involved.
Although the banks must regularly report the total amount of all International Banking Companies'
account holdings, patterns and changes of individual accounts are not seen by any CBB authorities
unless specifically ordered. No registry is kept on offshore trusts, since the offshore trust law did not
specify an oversight or regulatory authority and there is no way for any outside party to determine the
identity of the owners of an offshore trust. The secrecy protections built into the offshore services laws
have, in the case of offshore trusts, led to no recordkeeping at all.
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Belize is a member of the Caribbean Financial Action Task Force (CFATF).
Asset Seizure. The GOB is experimenting in its seizure of assets taken in connection with drug
trafficking. Colombian skifftype gofast boats supplement the meager fleet of maritime wing's patrol
craft. A twinengine aircraft, seized in connection with drug trafficking last year, is slated to be
overhauled and given a new engine courtesy of the British. The aircraft will be used by the BDF
airwing.
Extradition. Negotiations for a new extradition treaty between the USG and the GOB remain stalled.
Pending completion of a new treaty, the GOB continues to extradite fugitives, including Belizean
nationals, under the 1972 U.S.U.K. treaty.
Law Enforcement and Transit Cooperation. Belize actively cooperates with both Mexican and
Guatemalan authorities to combat drug trafficking or other serious crime. In 1997, the GOB took the
lead in organizing a Caribbeanwide counternarcotics exercise and conducted a joint exercise with the
U.S., Mexico and other Central American countries. BPF Commissioner Brooks was elected President
of the International Association of Chiefs of Police (IACP) this year. The GOB has sent numerous
officials to regional and international law enforcement conferences throughout Central America and the
US.
Demand Reduction is coordinated by the National Drug Abuse Control Council (NDACC) which
provides drug abuse education, information, counseling, rehabilitation and outreach. NDACC is actively
developing its six regional offices in the corresponding districts of Belize and was an active participant
in the UNDCP and OAS/CICAD sponsored development of a national drug abuse control strategy
master plan. NDACC completed a survey of prison drug use and developed recommendations to keep
prisoners from returning to drug activity after release from prison.
Law Enforcement Efforts. The GOB considers traffic in crack cocaine to be the biggest internal drug
problem because of the associated criminal activities that accompany hard drug use. Though increased
attention to antinarcotics matters has been demonstrated by the Ministry of National Security, securing
convictions remains a recurring problem. The GOB's Judiciary and Prosecutors office are understaffed,
poorly equipped and trained, and historically have been ineffective. A major trafficker was arrested in
midDecember and a large amount of currency confiscated.
Although there have been successes, the judicial system is weak. During 1997 four major drug cases
which went before the GOB's judiciary yielded three convictions. In one case, the GOB netted 1,323 kg
of cocaine and arrested four individuals. Although the four arrested were sentenced to five years in
prison, the Chief Justice of the Supreme Court overturned the sentence of the lower court and ruled that
they could be released after the payment of a $25,000 fine. One individual paid his fine and left the
country. Owing to the quick and vigorous action of the BPF, the other three were held on additional
charges and the original sentences reinstated upon review. Amid the public controversy that followed,
the Chief Justice retired. Another seizure of over 1,083 kg of cocaine resulted in the arrests of ten
Belizeans, Colombians and Mexicans. The GOB failed to prosecute these individuals based on weak
evidence.
Corruption. Home Affairs Minister Elito Urbina, the object of suspicion in the past in connection with
his family's involvement in drug trafficking activities, was removed from his cabinet office and given a
post as special envoy to Mexico. Newly appointed Police Commissioner Ornell Brooks suspended
twentytwo police officers pending investigations of corruption.
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Agreements and Treaties. Belize is a party to the 1988 UN Drug Convention on Narcotics and
Psychotropic Drugs. In March 1997, the GOB ratified the U.S.Belize Stolen Car Treaty. In September
the GOB signed the National Crime Information Center Pilot Project Assessment Agreement with the
US which allows for the sharing of information and data between the USG and the GOB. An overflight
ordertoland amendment to the USG/GOB maritime counterdrug agreement is currently under
negotiation, although the GOB agreed to implement the provisions sought in the amendment during
several counternarcotics operations in 1997. Although the GOB and the USG reached tentative
agreement on a new extradition treaty and a mutual legal assistance treaty in late 1996, the GOB
subsequently raised new concerns about certain aspects of these treaties and negotiations were stalled
during 1997.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The USG has provided support to develop the GOB's infrastructure in order to
combat its drug problems effectively. Support provided includes equipment and training for the JICC,
BPF, BDF, and the Dragon Unit. The USG remains concerned, however, that although seizures and
arrests are up, Belize's courts have shown a mixed record of convictions and sentencing.
Road Ahead. USG concerns over the next year include the need for improved investigations,
prosecutions, and convictions, including corruption cases and stronger support for the judicial branch.
Related to this are necessary code changes to facilitate investigations and presentation of cases. The
USG will also encourage the GOB to resume negotiations regarding the extradition treaty and MLAT,
and the overflight/order-to-land amendment to the maritime treaty, all of which need to be signed and
implemented. Belize's skies, coastline and rivers remain largely uncontrolled. Marijuana cultivation,
though not expanding in quantity, continues to require monitoring and periodic eradication. Belize must
continue to resist drug trafficking and continue to support the efforts of the BPF and the BDF.
Belize: Statistical Tables/Cocaine Seizures, 1990-97 [an Excel file; 11.5 KB]
CANADA
I. Summary
The Government of Canada (GOC) actively participates in international counternarcotics fora and
continues to discourage the abuse of narcotics. Canadian law enforcement officials cooperate closely
with their US counterparts on narcotics interdiction efforts.
Although Canada criminalized money laundering in 1989, the Government of Canada's approach to
money laundering remains fragmented. Canada still remains an easy target for drugrelated and other
types of money laundering. This is in large respect due to Canada's high volume of crossborder trade
with the US, open financial system, and lack of legal reporting requirements of large cash transactions.
In Canada, precursor and essential chemicals are diverted to illicit drug manufacturers, a portion of
which is channeled to the United States. These chemicals enter via standard land border crossings, and
are used primarily in the manufacture of methamphetamine.
II. Status of Country
Canada's history of democracy has produced solid institutions of government. These include a fair
judiciary, competent law enforcement agencies, and an able legislative body. Together, these entities
have fostered a public respect for the law. As a result, narcotics abuse has largely remained a
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manageable problem. While the GOC emphasizes demand reduction in its counternarcotics policy, it is
also active in domestic and international supply control efforts.
Cannabis remains the principal illicit substance of abuse in Canada. More than half the cannabis
consumed is produced locally, most of which is grown hydroponically. Cocaine (including crack) is the
second most popular drug and authorities estimate over 250,000 users in Canada. Methamphetamine use
has risen slightly, and heroin use remains constant around 40,000 users. Total estimated narcotics
abusers in Canada numbers over 1 million.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The Controlled Drugs and Substances Act (CDSA) became law on May 14, 1997,
replacing the Narcotic Control Act and amending certain other acts respecting the control of certain
drugs, their precursors and other substances. This sevenpart act enhances the powers of search, seizure,
restraint, and forfeiture. A permit is now required for the import or export of precursor chemicals,
although the sale of these chemicals within the country remains unmonitored. However, despite the
passage of the new law, regulations regarding the import/export of precursor chemicals have not yet
been implemented. It is estimated that these regulations will enter into force by mid1998.
Agreements and Treaties. The US and Canada have longstanding agreements on law enforcement
cooperation, including an Extradition Treaty and a Mutual Legal Assistance Treaty. In early 1997, a
Memorandum of Understanding (MOU) was drawn up to include the Royal Canadian Mounted Police
(RCMP), on a limited basis, as a member of the El Paso Intelligence Center (EPIC).
Canada actively participates in international antidrug fora including. the Dublin Group, Financial Action
Task Force (FATF), the InterAmerican Drug Abuse Control Commission of the Organization of the
American states (CICAD), and the United Nations International Drug Control Program (UNDCP).
Canada provided $1 million to UNDCP for 1996 and 1997, and contributed Canadian dollars 290,000 to
CICAD during the same period. Canada also assigned a demand reduction expert to CICAD for this
year. The Government of Canada has yet to announce its contributions to both the CICAD and UNDCP
for 1998. Canada is a party to the WCO's International Convention on Mutual Administrative Assistance
for the Prevention, Investigation, and Repression of Customs Offences "Nairobi Convention" Annex X
on Assistance in Narcotics Cases. The USG has concluded a Customs Mutual Assistance Agreement
(CMAA) with the Government of Canada.
Law Enforcement Efforts. RCMP statistics through the end of October of 1997 show seizures of 32
kilograms of heroin, 1,597 kilograms of cocaine, 48,193 dosage units of LSD, 3,504 kilograms of
marijuana, 3,504 kilograms of hashish, and 511 kilograms of liquid hashish. The RCMP also destroyed
292,880 cannabis plants.
RCMP statistics for the same period show a total of 9,376 drug related arrests. The breakdown of these
arrests is as follows. 240 heroinrelated, 1,916 cocainerelated, 3,912 marijuanarelated, 479 hashishrelated, and 2,829 other.
Corruption. The GOC does not tolerate drug trafficking or money laundering among its officials and
will continue to prosecute those who do break the law.
Cultivation and Production. Marijuana is grown throughout the country and is particularly abundant in
the provinces of Quebec and British Columbia. Cultivation of marijuana still falls below the 5,000
hectare level, however. Marijuana is distributed throughout the country and exported to the US. Exports
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to the US appear to be increasing, but not yet in quantities that could be said to significantly affect the
United States.
Drug Flow/Transit. Drugs are smuggled into Canada for domestic use and for transshipment to the
United States. Southeast Asian heroin continues to enter North America predominantly by sea
containers, followed by air and land routes. There is not sufficient evidence at this time, however, that
drugs from Canada come to the United States in quantities that could be said to significantly affect the
United States. We will be monitoring this situation carefully in preparing the Majors List this year.
Demand Reduction. The GOC emphasizes demand reduction in its drug control strategy and, along
with nongovernmental organizations, offers drug abuse educational programs. The GOC continues to
emphasize assistance to Aboriginals in resisting propane and gluesniffing. However, acrosstheboard
budget cuts in the federal government have affected the health sector and treatment programs and have
reduced resources for demand reduction.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. Working groups have met on numerous occasions over the past year to discuss
strategies for targeting crossborder organized crime activity involving drugs. The second meeting of the
crossborder crime forum took place in September, which included considerable discussions of drugs.
The Road Ahead. The United States looks forward to continuing its already excellent law enforcement
cooperation with Canada and will encourage GOC support and participation in international drug fora.
click here for Canada table
COSTA RICA
I. Summary
Costa Rica is an important transshipment area for cocaine en route to the US. Money laundering also
remains a serious problem. President Figueres has characterized the fight against drug trafficking as a
national security priority. Costa Rican President Jose Maria Figueres has characterized the fight against
drug trafficking as a "national security priority." The public security minister has called the drug
problem a "national emergency." Costa Rica is a party to the 1988 UN Drug Convention.
II. Status of Country
Costa Rica's location on the Central American isthmus makes it an important transshipment and
temporary storage area for cocaine smuggled to the US and Europe. During 1997, authorities seized
nearly 8,000 kilograms of cocaine, a record annual total for Costa Rica. However, we do not have
evidence establishing that the drugs transiting Costa Rica en route to the US are of sufficient quantity to
have a significant effect on the US. Most cocaine enters the country overland from Panama. Smugglers
utilize small aircraft, surface vehicles, human couriers, and maritime vessels as a result of enhanced
interdiction capabilities by Costa Rican police. Costa Ricans have also become increasingly concerned
about the increase in domestic consumption of crack cocaine and drugrelated violence The Government
of Costa Rica (GOCR) has adopted strict antidrug measures in an attempt to confront the threat posed by
drug trafficking. Despite improved counternarcotics and enforcement efforts, police agencies require
additional resources to fight drug traffickers more effectively.
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III. Country Actions Against Drugs in 1997
Policy Initiatives. The Figueres administration implemented the 1994 police code as part of efforts to
professionalize executive branch police forces. Under this new legislation, the traditional system of
massive personnel changes at the start of each new administration has been replaced by an orderly
process to create a more cohesive body of professionals. New recruits are also required to undergo
training at the National Police School. The Judicial Investigative Organization (OIJ) and the public
prosecutors' office are prepared to implement a new criminal procedures code, requiring judicial police
and public prosecutors to work more closely together in the investigation and prosecution of criminal
cases, to become effective in January 1998. The GOCR Migration Council has also proposed legislation
to make alien smuggling a criminal offense under Costa Rican law.
Some institutional changes were undertaken as well. During 1997, the Public Security Minister
appointed a new executive director and deputy director for the Joint Counternarcotics Intelligence
Center (CICAD), which operates the country's Joint Information Coordination Center (JICC). The El
Paso Intelligence Center (EPIC) regularly exchanges drug intelligence with CICAD. In March 1997, the
Legislative Assembly established a special narcotics committee to investigate drug corruption. The
Assembly is also considering proposed legislation to strengthen controls against money laundering,
increase penalties against drug traffickers, and fuse the two counternarcotics entities into a single
institute.
Regional cooperation is essential to the success of counternarcotics efforts, especially between drug
transit countries. Professional contacts developed during regional meetings such as the annual
International Drug Enforcement Conferences (IDEC), have significantly enhanced cooperation between
Costa Rican police officers and their counterparts in Nicaragua and Panama. Police regularly exchange
information on drug trafficking that leads to arrests and seizures. The activities of the System for Central
American Integration (SICA) based in San Salvador have also augmented regional cooperation.
Accomplishments. The Narcotics Section of the Judicial Investigation Organization (OIJ), the Drug
Control Police (PCD) of the Public Security Ministry, and other law enforcement units, collaborating
closely with Embassy DEA agents, have seized record amounts of cocaine this year. Relations among
US law enforcement agencies and GOCR counterdrug police officials remain particularly close. GOCR
law enforcement entities routinely share information and conduct joint operations.
The GOCR periodically consents to the extradition of drug traffickers and other criminal suspects to
other countries. In December 1996, the Costa Rican Supreme Court ruled that the 1991 US /Costa Rica
Extradition Treaty remained valid and that an earlier ruling declaring the treaty "inapplicable" applied
only to a particular case.
The National Drug Council (CONADRO) continues to implement a national drug prevention plan and
supervise demand reduction committees in communities throughout Costa Rica. The Public Health
Ministry operates an effective program to control the import and distribution of precursor chemicals and
prescription medicines.
Law Enforcement Efforts. The OIJ operates a small, professional counterdrug section that specializes
in international cases. The PCD expanded its focus from domestic drug trafficking to international
smuggling. The PCD will commence operations of a new post of duty located at the Costa
Rica/Nicaragua border checkpoint in Penas Blancas. This initiative is in response to a substantial
increase of large cocaine seizures by the PCD unit located on the Southern Costa Rica/Panama border
during the past year.
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US DEA agents and Costa Rican police collaborated closely in major drug seizures and arrests.
Authorities seized nearly 8,000 kilograms of cocaine, a record annual total for Costa Rica, as well as 30
kilograms of heroin. Noteworthy cocaine seizures included the following: 367 and 199 kilograms from
two tractor trailers near Penas Blancas in April and May; 250 kilograms from a tractor trailer at Paso
Canoas in June; 246 kilograms from a tractor trailer abandoned near Penas Blancas in July; 385
kilograms from a farm in Alajuela in July; 400 kilograms from a San Jose warehouse in August; 200,
302, and 1,000 kilograms from three tractor trailers at Paso Canoas in September; 100, 209, and 1,310
kilograms (the largest single seizure, to date) from three tractor trailers at Paso Canoas in October; and
800 and 260 kilograms from two tractor trailers at Paso Canoas in November. In addition, during 1997,
authorities seized over 25 kilograms of heroin, including six kilograms from a person traveling through
Juan Santamaria airport in March and thirteen kilograms hidden inside a larger shipment of cocaine
seized from a tractor trailer in October.
Members of the Public Security Ministry's Special Support Police (PAE) searched for and manually
destroy marijuana cultivations in the mountainous regions of northern and southern Costa Rica. The
weakest area in Costa Rican drug interdiction involves maritime shipments, particularly on the
Caribbean coast. The establishment of an interagency drug task force now underway, with both DEA
and State Department INL assistance, could help in the interdiction of both maritime and vehicular
shipments.
During the first ten months, police arrested 670 drug traffickers, including a major cocaine dispatcher,
Guatemalan Jose Meza, as he transited Costa Rica on a commercial flight.
Corruption. President Figueres has pledged repeatedly to prosecute all cases of official corruption.
While several senior officials have resigned because of alleged corruption, none of these cases involved
drug trafficking. In January 1997, authorities arrested two lowlevel Public Security Ministry officers for
accepting bribes to permit the entry of cocaine into Costa Rica. In late February, police arrested former
Legislative Assembly Deputy Leonel Villalobos Salazar when he tried to purchase cocaine from a local
distributor. In March, a Miami court sentenced Costa Rican Ricardo Alem to 13 years in prison for drug
trafficking. Later, Alem publicly accused two Legislative Assembly deputies, a Supreme Court
magistrate, and a judge of engaging in corrupt activities, charges that all four publicly denied. In early
January 1998, however, the Judicial Council dismissed the judge after determining that she had engaged
in corrupt behavior, including accepting money from Alem.
In June, a Costa Rican court found a midlevel Rural Guard commander (arrested in 1995) guilty of
accepting bribes to protect cannabis cultivations of the Vargas Hidalgo drug organization, sentencing
him to 12 years in prison. In October 1997, the Public Security minister dismissed two maritime section
officers for misuse of official resources. The Legislative Assembly is considering a code of ethics for
public officials.
Agreements and Treaties. Costa Rica is a party to the 1961 UN Single Convention and its 1972
Protocol, the 1971 UN Convention on Psychotropic Substances and the 1988 UN Drug Convention. As
noted earlier, the 1991 Costa Rican Extradition Treaty is in force. In May 1997, Costa Rica and
Paraguay signed agreements to fight drug trafficking and provide judicial assistance in criminal matters.
In July 1997, Costa Rica signed the Central American Convention for the Prevention and Suppression of
the Laundering of Money and Assets and Related Crimes. In October 1997, the US and Costa Rica
signed a case specific asset sharing agreement to permit the transfer of proceeds from a successful US
drug case in which OIJ officers provided valuable assistance. In November 1997, Costa Rica along with
other Central American nations, the Dominican Republic, Belize, and Panama signed an agreement to
fight drug trafficking and money laundering. Costa Rica and Nicaragua also signed a border cooperation
agreement in September 1995 to combat drug trafficking, illegal migration, and vehicle theft. In
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November 1994, the Legislative Assembly ratified the Convention on the Permanent Central American
Committee for the Eradication of the Illicit Production, Trafficking, and Use of Precursor Chemicals and
Psychotropic Substances, and Related Crimes. The GOCR has also entered into bilateral counterdrug
agreements with Mexico and Colombia. Costa Rica is a party to the InterAmerican Agreement on
Extradition.
Cultivation and Production. Members of the PAE detected and manually destroyed plots of cannabis
in remote areas near Panama, in the Caribbean region near Limon and Talamanca, and in Guanacaste
province. Such cultivations are usually small and intermixed with other crops. Overall, cannabis
cultivation remains relatively low and oriented towards domestic consumption. CICAD reported the
destruction of 128,555 cannabis plants during the first ten months of 1997. Costa Rica does not grow the
coca plant or opium poppy nor does it produce cocaine or heroin.
Drug Flow and Transit. Costa Rica is an important transshipment area for cocaine from Colombia to
the US. Smugglers periodically use Costa Rica as a temporary storage area for cocaine before
repackaging and sending it onward in containers on tractor trailers and ships.
Domestic Programs (Demand Reduction). Costa Ricans have become increasingly concerned over drug
consumption, particularly of crack cocaine. Abuse is highest in the Central Valley (San Jose, Alajuela,
Heredia, and Cartago), the port cities of Limon and Puntarenas, along the Panama border and in the
Barro del Colorado near the Nicaraguan border. The National Drug Council (CONADRO) has
implemented a national drug prevention plan that focuses on drug education and prevention. This
Council oversees 15 regional, 54 city, and 104 local demand reduction committees. The Costa Rican
Drug Abuse Resistance Education (DARE) Foundation, modeled after its US counterpart, conducts drug
awareness programs at schools using 35 PCD officers as instructors. In 1997, Costa Rica hosted the first
Hemispheric Conference on Evaluation of Drug Prevention Programs under sponsorship of the
Organization of American States.
IV. US Policy Initiatives and Programs
US Goals/Objectives. The principal goals of the US government in Costa Rica include enhancing drug
detection and interdiction capabilities, supporting efforts to locate and destroy marijuana fields,
supporting drug awareness programs, enhancing the criminal justice system, and strengthening controls
against money laundering. Specifically, these objectives include enhancing interdiction of drug
shipments in tractor trailers, improving maritime interdiction (possibly through a bilateral agreement),
providing specialized training and equipment to the PCD, OIJ narcotics section, CICAD, and Customs
Control police, supporting efforts to professionalize Costa Rican police, and improving the operational
capabilities of the Public Security Ministry's air and maritime sections.
Bilateral Cooperation. The US State Department sponsored numerous training programs in which
Costa Rican officials participated during 1997. In February 1997, three officials from the OIJ, PCD and
the Public Prosecutors' Office attended a regional money laundering seminar in San Salvador. Also that
month, two counterdrug officials participated in a Precursor Chemicals Seminar in Guatemala. A
visiting Drug Enforcement Administration (DEA) analyst also interviewed officials for a money
laundering threat assessment. In March, the embassy sponsored firearms training for 23 PCD agents. In
April, the CICAD director attended a Financial Crimes Enforcement Network (FinCEN) conference on
money laundering in Buenos Aires. In June, law enforcement officials from Costa Rica and other
Central American nations attended a regional drug enforcement seminar in San Jose. During this
seminar, the embassy sponsored a round table discussion of proposed changes to Costa Rican money
laundering laws for 20 GOCR and bank officials. In June, six officers from the PCD, OIJ narcotics
section, and customs control police attended a US Customs regional overseas enforcement training
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course in Panama. In July, the executive director of CONADRO participated in a four week
international visitor's program on drug abuse education and prevention. In July and August, USIA
helped sponsor visits by a US expert on financial crimes who discussed money laundering with GOCR
and regional law enforcement officials, national university faculty and students, and Legislative
Assembly deputies.
In October, the embassy sponsored computer training for public health ministry personnel involved in
controlling imports of precursor chemicals and prescription drugs. In November, seven officers from the
PCD, OIJ narcotics section, CICAD, and the national police school attended a regional DEA drug
intelligence course in Guatemala. Training of PCD, OIJ, and Customs police officials by the US Justice
and Treasury departments and associated agencies, often under State Department (INL) sponsorship, has
proven valuable in detecting drugs and other contraband and has noticeably increased the capacity of
officers in detecting illegal activities. The US International Criminal Investigative Training Assistance
Program (ICITAP) has provided valuable assistance to the pilot prosecutorpolice task forces during
1997 and will continue to assist in their development.
In 1997, the Embassy purchased a rigidhulled boat and trailer for use by the newly established
Interagency Drug Task Force, composed of PCD, OIJ narcotics section, Public Ministry, CICAD, and
customs police officers. Also in 1997, the Embassy procured computer equipment for CICAD, to permit
maximum use of new software, and recording equipment and tapes for the OIJ.
The Road Ahead. The US seeks to improve GOCR abilities to curtail the use of Costa Rica as a drug
transshipment and storage area, discourage drug consumption, fight corruption, and counter money
laundering. The establishment of an interagency drug task force should help considerably in the
interdiction of both maritime and vehicular shipments. The task force will have access to vehicles and
rigidhulled boats to permit timely response to reports of drug shipments arriving via the Caribbean
coast, Pacific coast, or the interAmerican highway. In addition, the judicial system will implement a new
criminal procedures code, effective January 1998, that provides for closer cooperation between OIJ
police investigators and public prosecutors during both investigations and prosecutions. The Legislative
Assembly is currently studying possible amendments to the country's drug statute which, if approved,
will strengthen controls against money laundering, increase penalties for drug trafficking, fuse the
national drug council and CICAD into one institute, and codify use of undercover agents in drug
investigations. The USG also hopes to work with Costa Rica to ensure effective implementation of the
bilateral extradition treaty.
click here for Costa Rica table
EL SALVADOR
I. Summary
El Salvador is a transit country for cocaine destined for the US. Information from police and drug
rehabilitation organizations also indicates that local consumption is on the rise. The Government of El
Salvador (GOES) is firmly opposed to the drug trade, a position supported by a significant increase in
cocaine seizures over the past year. The antinarcotics division (DAN) of the National Civilian Police
(PNC) has made significant strides, benefiting from participation in US sponsored training programs. El
Salvador is not a major drug producing country although small quantities of cannabis are grown for
domestic consumption. Money laundering is considered an emerging threat; the Salvadoran government
and opposition parties are currently working on draft money laundering legislation. El Salvador is a
party to the 1988 UN Drug Convention.
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II. Status of Country
Significant amounts of cocaine transit El Salvador en route to the US and neighboring countries by land
and sea. US financial crimes experts suspect that money laundering is on the rise, and have worked with
the GOES to develop legislation which would deter money laundering and tighten regulation of the
financial system. There is evidence that an excess of precursor chemicals is entering the country. This
evidence, and the lack of regularized methods of controlling this trade, give rise to the suspicion that
these chemicals are being transshipped to illicit laboratories in narcoticsproducing countries.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The president of El Salvador established a task force made up of governmental and
nongovernmental institutions in order to address the drug problem. Nevertheless, GOES implementation
of a counternarcotics master plan has been delayed due to the current focus on implementing landmark
criminal justice reform legislation. Implementation of these new criminal procedure codes will introduce
oral arguments to legal case proceedings and modernize the Salvadoran judiciary. Due to budgetary
constraints, implementation of the new criminal codes may be delayed from the originally scheduled
January 1998 entry into force date.
In the meantime, the government is developing new antinarcotics legislation and money laundering
legislation has been introduced in Parliament. The money laundering bill, based on model Financial
Crimes Enforcement Network (FinCEN) and Organization of American States/Commission Against
Addiction and Illicit Trafficking of Drugs (OAS/CICAD) texts, are designed to make the act of money
laundering a crime. There is a consensus among the various political parties on the need to strengthen
financial sector oversight.
The restructuring of the courts and other law enforcement agencies can greatly facilitate
counternarcotics efforts. The creation of the new National Civilian Police and improvements in the
judiciary have helped to reduce criminal penetration of government agencies. However, a more
systematic effort to cleanse the judiciary is needed to remove corrupt and incompetent judges.
Accomplishments. The 230 kilograms of cocaine seized in 1997 more than doubled last year's amount.
Nevertheless, we believe the problem is greater than reflected in this figure, in view of the quantities
seized in neighboring countries. During 1997, El Salvador embarked on significant legislative initiatives
that address areas covered by the 1988 UN Drug Convention. The Legislative Assembly passed the first
stage of a twostage constitutional amendment process designed to lift the ban on extradition of
Salvadoran nationals. Draft legislation was prepared on money laundering in consultation with US
experts and a final law is expected early in the new year. The GOES experts were also seeking US
assistance in writing legislation for asset seizures and in initiating discussions on a mutual legal
assistance treaty. The DAN and the customs service have enhanced their efforts to identify and control
precursor chemicals. Demand reduction and rehabilitation programs are being managed by the DAN in
cooperation with Drug Abuse Resistance Education (DARE) and by local organizations.
Law Enforcement Efforts. In 1997, 788.7 kilograms of cannabis were seized, compared to 674.9
kilograms in 1996 and 161.8 kilograms in 1995. These numbers reflect the reestablishment of an
effective narcotics law enforcement entity after a rebuilding process which occupied most of 1995. The
DAN and the GOES in general lack the resources to pursue major maritime interdiction operations. The
PNC's air wing is unable to intercept air shipments, focussing instead on identification and destruction
of the small cannabis fields. (3,776 plants were destroyed in 1997.) Nevertheless, the DAN is committed
to enhancing its effectiveness where possible. Canine retraining and maintenance programs have been
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extremely effective and are partly responsible for increased seizures in 1997.
Corruption. The GOES has effectively addressed corruption, which does not appear to be a major
impediment to effective counternarcotics efforts. A Salvadoran army major was arrested in early 1997
for his role in a shipment of over 100 kilograms of cocaine. Overall, as in most developing countries,
lack of funds and insufficient salaries makes all agencies vulnerable to bribes and increases the odds for
corrupt government practices. Efforts to reform the judiciary currently underway may help to decrease
internal corruption.
Agreements and Treaties. The US El Salvador Extradition Treaty dates from 1911, and the GOES has
voiced a willingness to update it. However, the first step in this regard must be the completion of the
process to amend the Salvadoran constitution to permit the extradition of nationals. This amendment
passed its first hurdle in the spring of 1997 and now faces ratification by the current Assembly. El
Salvador recently ratified the Central American Convention Against Money Laundering. All political
parties have now declared their desire to implement effective national money laundering legislation
early in the new year and draft legislation has already been developed to that effect. The GOES has
expressed a strong desire to work with the US to develop a mutual legal assistance treaty and a financial
information exchange agreement. El Salvador is a party only to the 1988 UN Drug Convention.
Drug Flow/Transit. The increase in cocaine seizures during 1997 may indicate an increase in drugs
transiting El Salvador. This increase may also be attributable to more effective law enforcement. Most
of the drugs entering El Salvador are destined for the US , although local consumption is growing. The
land route appears to carry the bulk of illicit drug shipments through El Salvador. However, the lack of
an air interdiction capability in Central America may soon draw increased shipments via aircraft.
Domestic Programs/Demand Reduction. The D.A.R.E program has entered its second year of
operation, working through the Demand Reduction Unit of the DAN. Two major demand reduction and
rehabilitation programs, FUNDASALVA and FUNDADIES, operate effective programs throughout the
country.
IV. US Policy Initiatives and Programs
US Policy Initiatives. The primary US goals are to help make the DAN an effective and selfsufficient
entity and develop a working antinarcotics infrastructure throughout the government and in the criminal
justice system.
Bilateral Cooperation. The bulk of US financial support goes to training for DAN agents, with a
significant focus on "train the trainer" programs. Assistance for money laundering initiatives, both for
the development of legislation and for enforcement programs, has had positive results as the GOES has
recognized the danger and taken key steps to address it. Continuing technical support, such as that
provided to the highly successful Joint Information Coordinating Center (JICC) and to the canine
program, has given the DAN the wherewithal to extend the reach of its enforcement efforts throughout
the country. Further cooperation is required to ratify a constitutional amendment for a bilateral
extradition treaty. The Salvadoran president has stated that a strong political push in the Assembly could
win the required twothirds majority for second round approval of the constitutional amendment
eliminating the ban of the extradition of nationals.
Road Ahead. Although El Salvador has made widerange progress in the war against illegal drugs, the
country still faces some significant challenges. Two of the most important objectives for the road ahead
are the implementation of judicial and legal reforms and the completion of money laundering and related
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legislation. Nevertheless, the progress made over the last year clearly reflects the positive political will.
During 1998, the US assistance program will focus on the completion of these tasks, and on the
continued development of a PNC capable, in the end, of carrying on the fight on its own.
click here for El Salvador table
GUATEMALA
I. Summary
Guatemala is a major transit country for cocaine from South America to Mexico and onward to the
United States. While considered an opium poppy source country in the late 1980's through early 1990's,
steady aerial eradication operations during 19901996 effectively eliminated the poppy crop. With peace
a reality after 36 years of internal conflict, President Arzu has made public security a top priority and
has shown special interest in ensuring maximum cooperation with the United States in combating
counternarcotics trafficking through Guatemala and in the region.
The Department of AntiNarcotics Operations (DOAN), a specially trained and equipped civilian police
command, continues to carry out narcotics investigations, interdiction operations, and opium poppy and
marijuana eradication campaigns. GOG cocaine interdiction operations, generally with USG support,
seized almost 6 metric tons of cocaine in 1997. Ground eradication operations, supported by limited
aerial reconnaissance, eliminated most of the known cultivation of opium poppy grown in remote areas
of Guatemala's highlands and substantial quantities of marijuana. There was also steady progress in the
successful prosecution of narcoticsrelated crimes. Over 90 percent of those accused of narcotics
trafficking are convicted, and sentences of up to twenty years are common.
Guatemala is a party to the 1988 UN Drug Convention, but has not yet passed the necessary legislation
to implement all of its provisions.
II. Status of Country
Guatemala is the preferred location in Central America for storage and transshipment of South American
cocaine destined for the United States via Mexico. A decline in US detection and monitoring efforts in
the past few years, including the removal of the USG helicopters in 1997, has contributed to the
reopening of air routes. This, coupled with an increase in the use of truck and shipping containers, has
turned Guatemala into a major staging area for USbound shipments.
Intensive aerial eradication missions during the period of 19901995, coupled with successful ground
eradication operations, reduced the opium poppy crop to negligible levels by 1996. The US Embassy has
no accurate intelligence on the level of production in 1997, as there has been no aerial reconnaissance of
the poppy growing regions since the USG helicopters departed Guatemala in early January 1997.
The amount of drug money being laundered in Guatemala is unknown, but the potential is very high
because of the relatively strong currency, weak monitoring and control of financial transactions, and the
lack of laws specifically designed to combat money laundering.
As part of its master plan, Guatemala's national drug coordinator, the Executive Secretariat to the
Commission Against the Addiction and Illicit Trafficking of Drugs (SECCATID) conducted detailed
surveys of estimated drug abuse, including alcohol. The studies confirmed that drug use is on the rise in
most age groups, with cocaine use increasing rapidly. Drug traffickers now often pay in cocaine for
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transportation and protection services, and some of that cocaine is sold on the local market.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The major initiative in 1997 was the transition from the old national and treasury
police forces to the new National Civilian Police (PNC) and the consolidation and elimination of various
paramilitary groups. The GOG, with help from the US and donor countries, began a comprehensive
training plan for current police members and trained and recruited over 3000 new police agents. As part
of the reorganization, the DOAN was transferred to the PNC as a complete unit, with a major pay
increase and after retraining of DOAN officers.
Accomplishments. SECCATID drafted a master plan and national strategy, which will be implemented
in 1998. The master plan includes both demand and supply reduction objectives. The GOG provided
additional resources to its counternarcotics agencies and, through SECCATID, increased drug awareness
programs to help stem increasing drug consumption.
The GOG also made major improvements in the selffinanced port security program, expanded
operations to the main Pacific port and the international airport, and signed specific letters of agreement
on the management and control of the ports. The Port Security Program (PSP) was also strengthened
with the addition of a US Customs Service advisor who provides training and oversight to the DOAN
and PNC.
Illicit Cultivation. Typical opium poppy fields today measure less than onefifth of a hectare and are
located in very steep and narrow mountain ravines, at elevations up to 10,000 feet. Poppy eradication
efforts in 1997 were hampered by lack of aerial reconnaissance.
Production. Cannabis production is centered in the large Peten region of northern Guatemala bordering
on Belize and Mexico. Post completed an aerial reconnaissance for marijuana using rented helicopters in
July covering all known areas of marijuana cultivation in the Peten. The survey located only 21 fields (a
total of 8.5 hectares) suggesting that cultivation of marijuana may be decreasing.
Distribution. The lack of radar coverage and helicopters hinders Guatemala's capability to interdict
drug smuggling aircraft, which the DOAN estimates may occur at least once per week. Meanwhile, large
loads of cocaine are seized on vehicular and maritime smuggling routes. One seizure of over 1,000 kilos
was delivered by fast boat.
Sale, Transport, Financing. The GOG has increased its efforts to identify and attack transportation
networks, coordinating closely with US law enforcement agencies (primarily DEA and US Customs),
and with its regional partners in Central America. Recent seizures involving truck containers were
facilitated by the DOAN special investigations task force that works closely with DEA. The GOG has
sought additional USG assistance to develop a regional information network to combat the transborder
shipment of narcotics.
Money Laundering. The US provided extensive technical assistance to the GOG in 1997. Though draft
legislation was completed, it has not yet been submitted to Congress for approval. It faces opposition
from the Guatemalan banking industry, which does not want to lose its right to secrecy. The GOG has
not conducted financial investigations or controlled suspected money laundering.
Asset Seizure. The 1992 narcotics law requires a conviction and specific links before an asset can be
seized. That aspect of the law remains ineffective and unused. NAS is working with the GOG to modify
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existing legislation to allow asset seizure after a minimal waiting period and in some cases without
convictions.
Extradition. The GOG has not extradited any fugitives to the US since 1995 based on constitutional
grounds. The Embassy has worked to promote adequate extradition legislation and procedures.
Mutual Legal Assistance. The USG does not have a mutual legal assistance treaty with Guatemala.
Law Enforcement and Transit Cooperation. The GOG works closely with USG organizations to stem
the flow of drugs through Guatemala. Both the DEA and the US Customs Service have strong support
from their GOG counterparts. A fulltime US Customs agent is now assigned to the port security
program, to replace a series of agents on temporary duty, and a new NASsponsored office has been
established in the Carribean port of Santo Tomas. In 1998 the GOG plans to have direct computer links
to shipping companies and drugrelated information from the US. A restructuring of security at the
international airport resulted in a substantial increase in cooperation between airport officials and
Embassy narcotics personnel.
Precursor Chemical Control. Large quantities of ephedrine-a precursor used to produce the stimulant
methamphetamine-are no longer being legally imported into Guatemala from Europe, but there have not
been effective controls to prevent diversions of the chemicals to other countries. The Guatemalan
Congress passed legislation that will go into effect in February 1998. The new law will authorize
effective control of precursor chemicals and the DOAN, and with additional US technical assistance,
will establish a special investigative unit to help control possible trafficking.
Demand Reduction. SECCATID, assisted by PNUFID (United Nations Program for the International
Prosecution of Drugs), drafted a Guatemalan master drug plan that will go into effect January 1998.
SECCATID conducted studies during 1997, which provided insight and direction to their work, and
recommendations stemming from statistics gathered were incorporated into the master plan. The results
indicate overall cocaine use has the greatest rate of increase, though alcohol is still the most abused
drug. Among the programs planned are the training of up to 400 educators, the development of drug
educational materials, including a textbook for use in schools, and an expansion of the Drug Abuse
Resistance Education (DARE) school program begun in 1996. The GOG is firmly opposed to the
legalization of drugs and continues to increase support for drug education programs.
Law Enforcement Efforts. The DOAN investigates major trafficking organizations within Guatemala
and cooperates closely with the United States and other nations to prevent the transit of drugs through
Guatemala. The GOG is also strengthening existing customs and immigration functions with Embassy
support in major reform programs initiated in 1997.
Guatemala also began development of modern information services and intelligence functions. By early
1998, a fullycomputerized information service is expected to be online with the DOAN and other
authorized users. The GOG has asked for USG assistance to develop a regional communications net to
share intelligence and facilitate cooperation. This net would allow the PNC and DOAN to work directly
with other countries in the region to target trafficking and other criminal organizations more effectively.
Corruption. The GOG does not, as a matter of policy, encourage or facilitate illicit production or
distribution of narcotic or psychotropic drugs or controlled substances or the laundering of proceeds
from illegal drug transactions. In addition, no senior government official is known to facilitate or
encourage the illicit production or distribution of such drugs or substances or the laundering of proceeds
from illegal drug transactions. Despite determined reform efforts, corruption continues to be a major
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problem in Guatemala, especially in the Guatemalan customs and immigration services. The GOG
named special administrators with expanded power for these two agencies and is in the process of
reforming their organizations. A positive change in 1997 is that military officers thought to be involved
in narcotics trafficking are now being arrested, with the support of military intelligence. In the past,
corrupt officers were quietly dismissed from active duty. The military, however, continues to be
involved in alien smuggling and corruption at Guatemala's main airport.
Arrests and Prosecutions. As the system of administration of justice, the police, the prosecutors of the
public ministry, and the courts is modernized and reformed, more and more of those accused of crimes
are actually brought to trial. The office of the special prosecutor for narcotics crimes is one of the best
organized in the country and works closely with the DOAN to ensure that those arrested are properly
and promptly arraigned and tried. In 1997, the office of the special prosecutor for narcotics crimes had a
case load of over 850 (including those accused of simple possession) and formally tried over 35 cases
involving suspected major trafficking. Of these, 32 resulted in convictions with sentences ranging from
1220 years in prison, plus fines.
Agreements and Treaties. Guatemala is a party to the 1961 UN Single Convention and its 1972
Protocol, the 1971 UN Convention on Psychotropic Substances, as well as the 1988 UN Drug
Convention. While aggressive interdiction and eradication operations, investigations of trafficking
organizations, and other law enforcement efforts by the GOG have been fully consistent with the goals
and objectives of the 1988 UN Convention, some aspects of the Convention have not been codified into
law and regulations, including the provisions on extradition, money laundering, and precursor chemical
controls.
In September 1997, the United States and Guatemala signed a bilateral treaty on the investigation and
recovery of stolen vehicles. The Embassy is working with the GOG to develop a professional police unit
that will be capable of investigating auto theft and dismantling some of the vehicle theft rings operating
in Guatemala.
The 1903 USGuatemala Extradition Treaty is still in effect, although there have been no extraditions
since 1995. The US has no mutual legal assistance treaty with Guatemala.
Drug Flow/Transit. Location and accessibility combine to make Guatemala a key transit and storage
area for cocaine and heroin shipments from South America. This year Guatemalan authorities
intercepted over 6 metric tons of cocaine. Over 15 kilos of heroin were also seized, mostly at
Guatemala's international airport.
In spite of the lack of airintercept assets, the GOG made three major seizures of airdelivered cocaine
(totaling 2.1 MT) that was captured on the ground in the vicinity of the drop sites. The DOAN also
captured a large cache of cocaine that had been delivered by fast boat, and several loads (including a 1
MT seizure) being smuggled in tractor trailers. The GOG is actively seeking USG assistance to expand
sea and air interdiction efforts, offering to use GOG helicopters and ships in interdiction efforts if the US
could provide additional logistical support.
The DOAN also made two notable arrests in 1997. A retired army lieutenant colonel was arrested with
30 kilos of cocaine in a sting operation. The same officer had been arrested in 1991 in a major operation
involving multiton shipments to the United States. The Chief Justice of the Constitutional Court had
approved his extradition for the 1991 charges just before he was assassinated. The reconstituted court
soon thereafter voted to deny the extradition, and the army officer eventually was freed on a technicality.
His trial in Guatemala on the new charges is pending.
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As a result of a tip to the DOAN's antidrug hotline, the DOAN found 13 kilos of cocaine in a shipping
container bound for Germany. Working closely with German police, the DOAN uncovered a complex
ring of traffickers, including the general manager of a large multinational corporation. In all, ten
individuals, who had been responsible for smuggling over $100 million in drugs to Europe, were
arrested in Guatemala, Germany, and Costa Rica.
IV. US Policy Initiatives and Programs
Institutional reforms continue in the DOAN and in elements of the judicial branch with US training and
operational and logistical support. While progress in narcoticsrelated prosecutions was steady, the
development of a new computerized casetracking program developed with US Department of Justice
assistance should help to expedite clearing the case backlog and better manage prosecutions.
To compensate for the redeployment of USG helicopters and resulting loss of a US supported air
interdiction capability in Guatemala, the United States and Guatemala are examining options to provide
air and sea mobility to the national civilian police and DOAN for use in counternarcotics operations.
In addition, the United States helps Guatemala in combating other transnational criminal activity, such
as stolen vehicles and the smuggling of undocumented migrants.
In August, the US and Guatemala signed Letters of Agreement (LOA) on counternarcotics cooperation.
In these agreements, the GOG committed itself to increase funding and staffing for public security
functions, including narcotics control. LOAs are also being discussed for immigration, customs, and
arms control.
In late 1997, the United States and Guatemala initiated discussions on a maritime counterdrug
agreement. The program met with initial resistance from elements within the Arzu Administration
(MOD and Foreign Ministry) and the opposition political parties on traditional sovereignty grounds. The
GOG has provided us with a counterproposal that is under study.
The Road Ahead. Major cocaine transshipment is expected to continue for the foreseeable future and
air transshipment of cocaine will become an increasingly serious problem because of the lack of air
interdiction assets.
USG efforts will continue to focus on developing an effective air interdiction program, developing a
more professional DOAN and an effective intelligence capability, combined with continued training and
support for the narcotics prosecutors and members of the judicial system. The GOG antinarcotics forces,
assisted by the USG, will continue to develop qualitatively and quantitatively, with more effective
investigative and law enforcement units to control transshipment, expanded case management and
tracking, increased data collection and analysis capability, and greater regional cooperation.
Possible diversion of precursor chemicals will be targeted as the new legislation and subsequent
regulations are implemented. In addition, specific legislation is needed to control money laundering
before it becomes a threat to the stability of Guatemala's fragile financial sector. While SECCATID has
drafted such legislation, little progress has been made to date and the prognosis for passage in 1998 is
unknown.
Some opium poppy cultivation will continue in the remote highlands and may increase due to the
absence of regular aerial reconnaissance and occasional aerial eradication. The continued ground
operations by the DOAN eradication unit will gain in importance, though this capability must be
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augmented by an intensive public information campaign and some form of aerial reconnaissance.
Marijuana cultivation will also continue, and could become a serious problem if not controlled by
periodic eradication measures. The GOG will increase public education and demand reduction efforts,
bringing in more private as well as public funding. Cocaine abuse will continue to grow as traffickers
now trade a percentage of cocaine shipments for transportation support services. This domestic cocaine
trafficking and use will strain even more the still fledgling civilian police force and exacerbate domestic
violence.
click here for Guatemala table
HONDURAS
I. Summary
Honduras is a transit country for drugs moving into the US. In 1997, the Government of Honduras
(GOH) created a task force to combat illegal transits through Bay Islands. The canine program at
international airports and border crossings continues to be the most successful local deterrent to
narcotrafficking. Honduras is a party to the 1988 UN Convention.
II. Status of Country
Although not a significant drugproducing country, Honduras serves as a transit zone for illicit drug
trafficking. As a result of limited customs controls, underpaid border officials, and a high volume of
legitimate commercial vehicular traffic, Honduras is particularly vulnerable to overland movement.
Maritime trafficking is also relatively unmonitored due to the Navy's lack of counternarcotics training,
poorly maintained ships and limited fuel. As in much of Central America, money laundering is also on
the rise in Honduras.
III. Country Actions Against Drugs in 1997
Policy Initiatives. On the eve of his electoral victory in November of 1997, the new Honduran
presidentelect, Carlos Roberto Flores, presented his "New Agenda." While emphasizing the need to
strengthen international relations, this policy blueprint commits to coordinating with the US and other
nations in the fight against international crime, including narcotrafficking. The Agenda states that drug
trafficking should be fought through better public education and new money laundering legislation. On
December 15, the Honduran Congress passed legislation making money laundering a criminal offense.
Honduras has not yet developed a counternarcotics master plan. Although the Public Ministry created a
counternarcotics unit in 1996, it is very limited by lack of resources, including even basic transportation.
The GOH has prepared comprehensive regulations pertaining to precursor chemicals which are to be
submitted to Congress for ratification in 1998.
Accomplishments. Cocaine seizures stood at 2,213 kg as of November 1997, compared with 3,275 kg
seized in 1996. The Joint Information Coordination Center (JICC) has enhanced law enforcement efforts
by providing critical tactical information on drug trafficking. The GOH stepped up efforts to reduce
local demand by increasing the number of trained personnel working in this area. In 1997, the GOH
created the Bay Islands task force to combat drug trafficking in its Caribbean waters. The US Customs
Service has rated Honduras's canine program the best in Central America.
Law Enforcement Efforts. While counternarcotics is a priority for the government of Honduras,
effectiveness is hampered by a lack of resources and coordination among law enforcement entities. This
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year, the GOH arrested 763 suspects for narcotics offenses with 73 categorized by the DEA as major
offenders. In 1997, the Honduran Supreme Court turned down a US request for the extradition of Michel
Francois, a former police chief in Haiti who is under indictment in the US on narcotics charges.
Corruption. Corruption is a major problem in all aspects of national life. The fact that an activeduty
Honduran military officer incarcerated for narcotics trafficking in 1995 remains in prison demonstrates
at least some progress in ending the traditional impunity enjoyed by Honduran elites.
Agreements and Treaties. The GOH is an active member of the InterAmerican Drug Abuse Control
Commission (CICAD), and has bilateral counternarcotics agreements with the US, Belize, Colombia,
Jamaica, Mexico, and Venezuela. Despite the existence of an extradition treaty between the US and
Honduras dating back to 1909, it has not been effective in securing the extradition of wanted criminals.
The US has proposed the negotiation of a "shiprider" and assetsharing agreement with the Honduran
government. As of early 1998, there is no such asset sharing or forfeiture agreement with the GOH. The
USG has recently concluded a Customs Mutual Assistance Agreement (CMAA) with Honduras.
Cultivation/Production. Marijuana is the only illegal drug cultivated in Honduras. Although the GOH
employs aerial photography, it has no sophisticated technology to determine crop size. Aerial herbicides
are not used, as illegal crops are cultivated alongside food sources. With support from the USG, the
GOH conducted three eradication operations in 1997, eliminating a total of 337,817 cannabis plants.
Drug Flow/Transit. Most drugs entering Honduras merely transit the country or its territorial waters.
An estimated 90 percent of all drugs entering Honduras are destined for the US. The remaining 10
percent is mostly consumed domestically or in transit to other Central American/Caribbean countries.
Law enforcement authorities believe that the volume of illegal transits rose during 1997, as local
consumption of cocaine and crack is on the rise. Puerto Cortez, a major port, has limited security and
recently opened a ferry service to Port Isabel. This has the potential to be a major smuggling conduit.
Domestic Programs/Demand Reduction. Alcohol and inhalants remain the most serious substance
abuse problems in the country, followed by marijuana and cocaine. Crack cocaine use is limited, but
increasing on the northern coast and in urban centers. The Honduran Institute for the Prevention of
Alcoholism and Drug Abuse, under the umbrella of the Honduran Inter-institutional Coordinating Body
for Addictions (CIHSA), oversees the implementation of demand reduction programs operated by the
Ministries of Public Health and Education and by nongovernmental organizations. Through their efforts,
thousands of children, parents, and teachers have participated in workshops and other events focused on
drug abuse prevention and education.
IV. US Policy Initiatives and Programs
Policy Initiatives. Stepping up counternarcotics efforts in Honduras is a major US policy goal in the
region. The US aims to strengthen the capability of the GOH to suppress trafficking, consumption, and
export of illegal drugs. The USG specifically supports the GOH in the development of its
counternarcotics infrastructure, intelligencegathering and analysis capabilities, interdiction and
eradication efforts, and local demand reduction.
Bilateral Cooperation. The USG and the GOH maintain a Bilateral Counternarcotics Committee. In
1997, the principal recipients of USG assistance included the National Police, counternarcotics units of
the Public Ministry and the Armed Forces, the JICC, the Bay Islands task force, and local demand
reduction programs. Joint US Honduran military training exercises have enhanced the ability of the
armed forces to support counternarcotics operations.
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The Road Ahead. The GOH is firmly committed to the battle against illegal drugs. The USG will
continue to support GOH efforts to professionalize the counternarcotics unit of the Public Ministry, to
create a viable deterrent to maritime drug transit, to obtain and use counternarcotics intelligence, and to
reduce demand. The USG will also encourage the GOH to enact pending counternarcotics legislation
and anticipates the adoption of asset seizure measures in 1998. The USG looks forward to working with
President Flores toward the achievement of our mutual goals.
click here for Honduras table
[end of document]
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International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
THE CARIBBEAN
ARUBA
I. Summary
Aruba is a staging area for international narcotics trafficking organizations that transship cocaine and
heroin from Colombia, Venezuela and Suriname to the United States and Europe. Its key position near
the Venezuelan coast with air and sea links to South America, Europe, Puerto Rico and other Caribbean
locations makes it a prime transshipment point. Drug shipments are made via containerized cargo,
commercial airlines and cruise ships.
Money laundering organizations use legitimate companies as fronts to invest in land development and
other construction projects. The Government of Aruba's (GOA) Free Trade Zone (FTZ), casinos and
resorts are reported to be attractive venues for money laundering. Responding to these issues, the
Government of the Netherlands (GON) and the GOA appointed four ArubanDutch Mixed Commissions
to investigate money laundering vulnerabilities in the Free Trade Zone; Gaming Industry; Import,
Export and Transit of Cash Money; and Legal Entities (offshore businesses). The GOA has accepted
each of the recommendations of the four commissions and the drafting of legislation and regulations that
implement the recommendations is currently underway.
Although Aruba is a part of the GON, it has autonomy over its internal affairs and has independent
decisionmaking ability in many drug policy areas. In 1997, the GOA passed and implemented a new
criminal procedural code that allows for expanded investigative powers for local law enforcement as
well as for extradition of nationals subject to their serving any sentences imposed in Aruba. The changes
in criminal procedure removed one of the last remaining barriers to the GOA's compliance with the 1988
UN Drug Convention standards. The GOA has yet to ask the GON, a party to the 1988 UN Drug
Convention, to extend it to Aruba.
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The GOA, as a participant of a joint NetherlandsNetherlands AntillesAruba Coast Guard, received two
small fast boats to patrol the coastal waters and interdict drug shipments. The GOA established a money
transaction monitoring entity (MOT) to review unusual transactions in the financial sector. Aruban law
enforcement officials participated in USGsponsored training courses for drug enforcement during 1997.
Indications of corruption still hinder the effectiveness of GOA efforts against international narcotics
traffickers and money launderers. The withdrawal of the OLA party from the Eman coalition
government and the government's subsequent fall in late 1997 was linked in the press to the efforts of
elements within Aruban society and political circles who are seeking to halt or reverse recent
government actions, including progress in transnational crime, counternarcotics and money laundering
issues. New elections in December returned no one party with a parliamentary majority and efforts to
form a new coalition government have moved slowly. Progress in implementing antidrug measures
approved in 1997 may be delayed as a result of the political impasse.
II. Status of Country
Both cocaine and heroin enter Aruba via oceangoing vessels originating in Colombia and small fishing
vessels from Venezuela. The narcotics are then transshipped via couriers or commercial shipments.
Aruba has initiated a number of positive steps toward an effective antinarcotics trafficking program.
However, until the steps are completed, significant shortcomings exist. As indicated by the number of
couriers arrested, Aruba continues to be a transshipment site for drug organizations sending narcotics to
the US via cruise ships, commercial airlines, and container cargo shipments. A significant number of
prisoners in Aruban jails and third country nationals pending extradition processing are Colombian and
other South American nationals charged with drugrelated offenses. While unexplainable bursts of
financial growth have slowed down, new land development projects have appeared all over the island. A
new Code of Criminal Procedure was put into force by both the GOA and the Government of the
Netherlands Antilles (GONA) on October 1, 1997.
III. Country Actions Against Drugs in 1997
Policy Initiatives. A new Code of Criminal Procedure, effective October 1, 1997, allows for the
extradition of Aruban nationals. Additionally, the GOA has received two small fast patrol boats for
inscription into the joint NetherlandsArubanNetherlands Antillean Coast Guard.
Accomplishments/Law Enforcement Efforts. A new draft law on the supervision of the credit system
was presented to Parliament on February 27, 1997. When the law is passed, the Central Bank of Aruba
will have more power to safeguard the financial integrity of the banking sector. Offshore banks would
also fall under complete supervision of the Central Bank, thus formalizing the existing supervision
practices.
The GOA and the GON appointed four ArubanDutch Mixed Commissions to investigate money
laundering vulnerabilities in the Free Trade Zone; the Gaming Industry; Import, Export and Transit of
Cash money and Legal Entities (Offshore businesses). The recommendations of these commissions have
been accepted by the GOA and implementing legislation and regulations are being drafted. The GOA, in
coordination with the USG and the GON, will provide training courses to police and other officials
where necessary, while a publicity campaign will ensure the awareness of the public of all the important
changes made to Aruba's legal system as a result of these laws.
Some of these activities are made possible through technical assistance programs, offered by the GON.
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In addition, the GOA is making considerable efforts by making funds and qualified personnel available
to ensure the enforcement of new laws. GOA law enforcement officials maintain good working relations
with their USG counterparts. This relationship has been one of the key factors in the increased arrests of
couriers transiting through Aruba.
Corruption. Amidst the persistent rumors of widespread corruption, from high level cabinet officials to
law enforcement officials, a cabinet member is under investigation for possible irregularities in awarding
multimillion dollar contracts. Several police and prison officials have also been dismissed and are under
investigation. There is also concern that one financially prominent family used its wealth to influence
the political process.
Indications of corruption still hinder the effectiveness of GOA efforts against international narcotics
traffickers and money launderers. The withdrawal of the OLA party from the Eman coalition
government and the government's subsequent fall in late 1997 was linked in the press to the efforts of
elements within Aruban society and political circles who are seeking to halt or reverse recent
government actions, including progress in transnational crime, counternarcotics and money laundering
issues. New elections in December returned no one party with a parliamentary majority and efforts to
form a new coalition government have moved slowly. Progress in implementing antidrug measures
approved in 1997 may be delayed as a result of the political impasse.
Agreements and Treaties. On October 1, 1997, a new Code of Criminal Procedure went into effect in
Aruba, allowing for extradition of nationals, subject to their serving any sentences imposed in Aruba.
On October 3, 1997, the USG requested the provisional arrest of four Aruban nationals. The GOA
detained the individuals, including two members of a prominent Aruban family, and extradition hearings
will be held in early 1998. Several extraditions of third country nationals were all effected in 1997. The
USG and the GON continue to actively negotiate a Maritime Counterdrug Agreement.
Demand Reduction. The GOA has publicly recognized the problem of drug transit through its territory
and the effect drug trafficking has on domestic crime. While drug addiction has increased, the GOA is
finding it difficult to cope with high costs of rehabilitation and prevention programs. Drug organizations
in Aruba are now paid in cocaine instead of cash. Cocaine has all but replaced marijuana as the preferred
"party drug". The added abundance of cocaine has also given way to the increased production and
availability of its cheaper derivative "crack".
IV. US Policy Initiatives and Programs
Policy Initiatives. The USG has assisted the GOA in the drafting and implementation of appropriate
legislation and law enforcement controls against potential money laundering through the free zone,
casinos, and other legal entities in Aruba. With the implementation of the new Code of Criminal
Procedure, local law enforcement procedures have taken a large step forward. The USG has been
encouraged by the efforts of the GOA, including the provisional arrest at USG request of the four of the
five Aruban nationals wanted for possible extradition in 1998.
The Road Ahead. The GOA has drafted a comprehensive package of antimoney laundering legislation
and has proposed general recommendations for improving control over import and export of cash and
other legal entities. In 1998 the USG will be looking for vigorous implementation of the
recommendations and passage of the legislation that has been pending. The GOA has expressed interest
in closer cooperation and participation in training and exchange programs with the USG, both of which
will be required to ensure the effectiveness of counternarcotics operations. The GOA will need to take
strong steps to meet the goals and objectives of the 1988 UN Drug Convention, including positive
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movement on the extradition of Aruban nationals and control of drugrelated corruption of public
officials.
THE BAHAMAS
I. Summary
The USG and the Government of the Commonwealth of The Bahamas (GCOB) have enjoyed an
excellent, cooperative working relationship on counternarcotics over the past decade. The GCOB places
a high priority on combating drug transshipments through its archipelago, as demonstrated by the
extensive resources it devotes to this initiative. Nevertheless, significant quantities of illicit drugs
continue to transit The Bahamas en route to the US , and The Bahamas remains a major drug transit
country. The GCOB cooperates very closely with the USG on Operation Bahamas and Turks and Caicos
(OPBAT). US and Bahamian law enforcement worked very closely throughout the year to respond to
increases in air and maritime transshipment incidents.
The first country to ratify the 1988 UN Drug Convention, The Bahamas continues to take steps to
implement it. Following passage of antimoney laundering legislation (March 1996) and implementing
regulations (December 1996), in November 1997 The Bahamas submitted its strong antimoney
laundering regime to mutual evaluation by the Caribbean Financial Action Task Force (CFATF).
During the year, the GCOB continued to strengthen its judicial system, with assistance from the USG.
However, procedural delays continue to plague the court system, leading to delays in drug cases. The
Bahamas needs to improve the effectiveness of its court system in disposing of drug cases more
expeditiously.
The GCOB should also put greater emphasis on forfeiture of the proceeds of crime and trafficker assets,
including early disposal of commodities used in trafficking before they lose value. The Bahamas has not
yet designated the US under the Bahamian law concerning execution of foreign forfeiture orders in The
Bahamas, despite repeated US requests since 1993. In past years, The Bahamas has prosecuted and
convicted some middle and lowlevel officials on charges of narcotics corruption.
II. Status of Country
The Bahamas is a country of approximately 275,000 people scattered over an area the size of California,
strategically located on the air and sea routes between Colombia and the US. The Bahamian archipelago
contains hundreds of small, deserted islands used for transshipment and temporary drug storage, and is
only 40 miles from south Florida at its closest point. These geographic characteristics make The
Bahamas a likely target for drug traffickers. Notwithstanding its strong antimoney laundering
legislation, the country's bank secrecy laws and its role as a regional financial center also make The
Bahamas an attractive target for money laundering.
III. Country Actions Against Drugs in 1997
Policy Initiatives. During 1997, the GCOB continued its efforts to fulfill the objectives of the 1988 UN
Drug Convention by submitting its recently adopted antimoney laundering regime to mutual evaluation
by CFATF. The GCOB followed up passage of money laundering implementing regulations in
December 1996 by having the central bank of The Bahamas issue guidance notes for banks and directing
the bankers' association to undertake selfmonitoring, including conducting money laundering seminars
for bank personnel. At the request of the Royal Bahamas Police Force (RBPF), USG agencies conducted
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money laundering and asset forfeiture seminars.
Accomplishments. The GCOB, working closely with the USG, has completed a significant portion of a
multiyear judicial modernization project. The project's purpose is to reduce delays in criminal, especially
drug cases pending in the courts. As a result of computerization of the Bahamian courts, the court
registrar's office, and the attorney general's office, the Bahamian judicial system is on its way to
becoming the most technologically advanced in the region. The GCOB will be moving in 1998 to
implement a key piece of the project-putting in place a case management software system-that should
accelerate the movement of drug cases through the courts. A culture of court delay still prevails among
many lawyers and magistrates. However, there is a strong commitment at the highest levels of the
judicial branch to reform this culture.
The RBPF maintains one of the most professional forensic laboratories in the region. With USG
assistance, the forensic lab is now fully computerized and is run by a cadre of welltrained, motivated
professionals. The forensic lab has provided important evidence in hundreds of drug cases. The US trained RBPF canine unit is well managed; its narcoticsdetecting dog program is highly reliable and is a
vital component of airport and police drug operations, including OPBAT.
Regarding USG requests under our bilateral mutual legal assistance treaty (MLAT), the attorney
general's office is now using USGprovided computer equipment to expedite its responses. Although
there is still a small backlog of pending USG requests, the attorney general's office committed to
answering all pending MLAT requests by the end of 1997, and to responding more quickly to future
USG requests.
In response to USG concerns over the security of operations at the new container port in Freeport, Grand
Bahama, the GCOB has taken significant steps to make that facility less vulnerable to trafficking in
drugs and other contraband. The GCOB has implemented many of the specific recommendations made
by USG agencies, including the establishment of stringent hiring guidelines and initial polygraph and
drug testing of new port employees. USG officials who have inspected the port conclude that the
security guidelines established there are quite extensive and eliminate many of the security problems
found at US seaports. Random drug testing of port personnel led to the dismissal in October 1997 of
four port employees.
The GCOB continues to cooperate with the US on extradition requests, based on the 1994 US Bahamas
extradition treaty. There are several drugrelated extradition requests pending in the Bahamian court
system.
Asset Seizure/Forfeiture. Under Bahamian law, the assets of a convicted drug offender are subject to
forfeiture and may be seized from indicted drug traffickers. These assets, however, may not be forfeited
and sold until the suspect is convicted. Since defense attorneys are often able to delay drug cases for
years, by the time drug traffickers are convicted, seized assets have lost much of their value. The
attorney general's office continues to experience little success in forfeiting trafficking proceeds. Funds
from the sale of forfeited assets are deposited in the government's general fund and are not earmarked
for drug control purposes.
The GCOB has not agreed to designate the US under the Bahamian law concerning enforcement of
foreign asset forfeiture orders, despite repeated USG requests since 1993. If The Bahamas were to
designate the US (under Section 21 of The Bahamas 1986 Tracing and Forfeiture of Proceeds of Drug
Trafficking Act) as a country whose forfeiture orders could be enforced in The Bahamas, a forfeiture
order executed in a US court could be forwarded to The Bahamas for enforcement. This would mean
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that The Bahamas would not have to bring a local criminal prosecution, as they do now, to forfeit
property proven to be the proceeds of US drug trafficking activity and found forfeitable under US law.
These assets, once forfeited, could be made available for law enforcement purposes, as is currently done
in the US. Such assets would be subject to potential sharing between the two governments on a casebycase basis, based on the relative contribution of each country's law enforcement agencies.
Law Enforcement Efforts. The RBPF continued its decadelong, active participation with USG
agencies and Turks and Caicos police in Operation Bahamas and Turks and Caicos (OPBAT), a
tripartite effort to intercept narcotics shipments and arrest traffickers in the Turks and Caicos Islands and
in The Bahamas. USG helicopters operating from three bases in The Bahamas facilitate these operations.
The GCOB sustained its strong commitment to OPBAT by continuing to fund its 27man
counternarcotics strike force unit.
During 1997, cocaine seizures rose to the highest level since 1992. Marijuana seizures rose to the
highest level recorded since 1989. Known air trafficking events were up from the previous year. While
the total number of known maritime trafficking events (primarily gofast vessels) has remained
somewhat stable, larger drug loads are being moved by bigger vessels (mainly coastal freighters) with
hidden compartments are being reintroduced in the area. USG agencies concur that there is an upward
trend by narcotics traffickers in their use of Bahamian territory for cocaine and marijuana transshipment
into the US. Traffickers increasingly are using tactics that make it difficult for US and Bahamian law
enforcement to intercept their shipments. Among these is the everincreasing use of Cuban airspace and
territorial sea to evade OPBAT assets, and the use of low profile boats and freighters.
Maritime drug smuggling through The Bahamas maintained its recent predominance over air smuggling,
although several surges in air transport were noted throughout the middle part of the year. Large
amounts of cocaine from South America, as well as very large amounts of marijuana originating in
Jamaica, continued to be smuggled through The Bahamas for transshipment to the southeastern United
States. In May 1997, the RBPF and DEA seized almost 5,000 pounds of marijuana from a vessel near
Great Exuma, en route from Jamaica to the US. In July 1997, the RBPF and DEA boarded a vessel near
Grand Bahama and seized 1,370 kg of cocaine destined for the US. The Bahamian police continue to
discover and destroy small marijuana farms throughout the island chain. In July 1997, the police raided
a farm in Eleuthera and eradicated 10,000 marijuana plants.
The Bahamian Drug Enforcement Unit (DEU) works closely with DEA on drug investigations. The
DEU is a special force within the RBPF composed of 84 officers (including the counternarcotics strike
force). At the end of 1997, the GCOB had arrested 1,894 persons on drug charges and seized 2,58 metric
tons of cocaine and 3.76 metric tons of marijuana, according to GCOB statistics. The DEU is presently
conducting several money laundering investigations based on the recently passed money laundering law.
Corruption. As a matter of policy, the GCOB does not encourage or facilitate illicit production or
distribution of drugs, or the laundering of illicit proceeds therefrom. The USG is not aware of senior
officials of the GCOB engaging in, encouraging, or facilitating the illicit production or distribution of
drugs, or the laundering of proceeds from illegal drug transactions. In past years, some mid and lowlevel
officials who engaged in narcoticsrelated corruption were prosecuted successfully. Despite GCOB
willingness to prosecute, the judicial system's weaknesses, such as allowing defense attorneys to delay
cases, reduce the possibility that narcotics traffickers and any corrupt officials who might assist them
will serve appropriately lengthy prison sentences.
Agreements and Treaties. The Bahamas is a party to the 1961 Single Convention and its 1972
Protocol, the 1971 Convention on Psychotropic Substances, and 1988 UN Drug Convention. The GCOB
works to accomplish the goals and objectives of US Bahamas bilateral narcotics control agreements,
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which facilitate cooperative action on a wide range of narcoticscontrol measures, such as improving the
efficiency and effectiveness of the judicial system, impeding money laundering, reducing local demand
for drugs, and preventing the transshipment of drugs through Bahamian waters via OPBAT and other
bilateral law enforcement efforts.
The US Bahamas Mutual Legal Assistance Treaty (MLAT) facilitates the bilateral exchange of
information and evidence for use in criminal proceedings. The MLAT can be used to pierce Bahamian
bank secrecy laws where credible evidence exists of narcotics crimes, money laundering, or other
serious offenses. The GCOB generally responds positively to MLAT requests, and is making a serious
effort to speed up its response time.
The GCOB has been receptive to US extradition requests, based on the 1994 US Bahamas extradition
treaty. Actual extraditions, however, are often slowed by procedural delays in Bahamian courts. The U.S
and The Bahamas entered into a maritime counternarcotics cooperation agreement in May 1996, which
permits The Bahamas to embark RBDF or RBPF officers to act as shipriders on US vessels operating in
Bahamian waters. The agreement permits the US vessels to support these shipriders in Bahamian
territorial seas to board, search, and, if evidence warrants, seize US , stateless, or third nation vessels; to
enter Bahamian territorial seas to assist Bahamian law enforcement personnel in the enforcement of
Bahamian laws; and to board, search, and seize Bahamian vessels on the high seas suspected of
involvement in criminal activity. This agreement also authorizes USG law enforcement aircraft to
overfly Bahamian territory.
Drug Flow and Transit. During 1997, drug flow estimates for cocaine remained at an elevated level of
3.5 metric tons per month. Flow estimates for marijuana was also at an elevated level, with a very
conservative flow estimate of four metric tons per month.
Demand Reduction Programs. The GCOB makes modest budgetary contributions to demand
reduction programs, especially in education and prevention. The USG provides some assistance to the
government's National Drug Council and to some Bahamian NGOs. The number of new drug users has
declined notably in the past ten years. Most usage among young Bahamians is restricted to marijuana.
IV. US Policy Initiatives and Programs
Policy Initiatives. The goals of USG assistance to and presence in The Bahamas continue to be to
dismantle trafficking organizations, stem the flow of drugs through The Bahamas to the US , and
strengthen Bahamian law enforcement and judicial institutions to make them more effective and selfsufficient in dealing with narcotics trafficking.
Bilateral Cooperation. The GCOB continues to allocate significant budgetary resources to its
counternarcotics efforts and to bilateral cooperation with the US. Its budgetary commitment to the RBPF
drug enforcement unit, canine unit, and forensic laboratory has paid important dividends in the arrest
and conviction of local drug dealers. The GCOB commitment to OPBAT, through its funding of the
RBPF strike force unit and the support of the RBDF, has led to close bilateral cooperation resulting in
numerous drug arrests and seizures. The RBPF and RBDF, however, need to develop a closer working
relationship, especially on drug operations.
The GCOB has demonstrated its commitment to a strong antimoney laundering regime. Following
passage of money laundering legislation and implementing regulations in 1996, the GCOB submitted its
legislation to a mutual evaluation review by the CFATF in November 1997. The RBPF drug
enforcement unit is already applying the new legislation in developing several drug money laundering
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investigations.
The attorney general's office and the Bahamian judiciary have strongly supported the USGfunded
judicial enhancement project. Their leadership on the project has been instrumental in computerizing
Bahamian courts. Likewise, key members of the judiciary have become vocal proponents of the need to
change the judicial system's culture of delay. In February 1997, The Bahamas hosted a very successful
regional judicial delay reduction conference. In November 1997, the Chief Justice of the Bahamian
Supreme Court hosted a visit by a US expert on court delay reduction.
The Road Ahead. Because of its location, The Bahamas is likely to remain a target for drug trafficking
and other criminal activity for the foreseeable future. Its niche as a financial center and its bank secrecy
laws also make it vulnerable to money laundering. Over the last ten years, the Bahamians have
maintained a strong track record of commitment to USGled drug interdiction efforts. Because of the
country's small population and budget, and its expansive geography, the GCOB will continue to depend
upon significant USG assistance to fight international narcotics trafficking and crime. A key objective of
US counternarcotics assistance in The Bahamas, however, is to strengthen the country's institutions to
allow the GCOB to assume a greater share of the burden of combating drug trafficking and other
criminal activity. A second objective is to continue to strengthen US Bahamian counternarcotics and
countercrime cooperation, a relationship that serves as a model in the region.
In coming years, the USG and the GCOB will seek to complete the judicial enhancement project,
designed to improve the efficiency and speed with which drugrelated and other criminal cases move
through the judicial system. The USG will support GCOB efforts to implement its antimoneylaundering
legislation, by providing training in conducting complex criminal financial investigations. We will
continue to press the GCOB to designate the US under the Bahamian law concerning foreign forfeiture
orders. US law enforcement agencies will cooperate with their Bahamian counterparts to prevent other
criminal activity, such as firearms trafficking, alien smuggling, and gang activity. We will continue to
provide training, equipment and intelligence to the GCOB in support of our combined OPBAT effort.
See Bahamas Tables
CUBA
I. Summary
Cuba's location between the United States and principal drugexporting countries makes it an attractive
transshipment point for narcotics traffickers. Given the absence of formal diplomatic relations with
Cuba, the USG lacks firsthand knowledge of the narcotics situation there or of counterdrug efforts by
Cuba's government. In 1997, use of Cuba's airspace and its vast territorial waters for narcotics
transshipment continued. In 1997, the numbers of arrests for trafficking in cocaine and marijuana
decreased. Although the total quantity of marijuana seized by the Government of Cuba (GOC) was
higher, the number of seizures was lower. Cuban authorities attribute the increase in domestic trafficking
to Cuba's growing tourism industry and stepped up their efforts to combat narcotics trafficking and
consumption in 1997. Cuba and the United States continued to cooperate on a casebycase basis,
exchanging information in specific cases on vessels and aircraft suspected of drug trafficking. Cuba is a
party to the 1988 UN Drug Convention.
II. Status of Country
Cuba's location and limited patrolling of its waters make it a potentially attractive transshipment point
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for Central and South American drug traffickers. The GOC continues to be concerned at the threat of
increased trafficking in Cuba. Anecdotal information suggests an increased use of Cuban territory
(particularly via overflight and coastal drops), but verification is sketchy. The GOC took some small
steps in 1997 to deter potential money launderers, although money laundering does not appear to be a
problem.
III. Country Actions Against Drugs in 1997
Policy Initiatives. In 1997, the Cuban government continued its antinarcotics efforts. According to the
GOC, Cuba enhanced antinarcotics cooperation with several countries and received significant antinarcotics assistance and training as a result.
Accomplishments. The GOC's antinarcotics efforts were directed towards transshipped narcotics in
Cuban territorial waters and narcotics possession and use in locations frequented by foreigners and
tourists. Some accounts of domestic narcotics arrests, seizures, and prosecutions appeared in the state
press. In one such case in April, the government press reported that a Cuban court had sentenced two
Cuban doctors to four and seven years respectively for selling one thousand vials of morphine worth ten
thousand dollars to an Italian tourist. The court also revoked the doctors' licenses for the duration of
their jail sentences and confiscated some property.
Law Enforcement Efforts. The GOC maintained that it had no serious domestic consumption or
trafficking problem, but in June state media sources indicated that domestic trafficking had risen due to
the increased number of tourists-over a million-who visited Cuba in 1997. Domestic demand for highpriced drugs such as cocaine is believed to be low. Total cocaine seizures and related arrests were down.
While the quantity of marijuana seized rose, the number of arrests dropped.
In 1997, Cuba received a patrol boat from the French government and $300,000 worth of training and
equipment from the United Kingdom to help it drug trafficking at its airports. In June, the GOC
announced that a Ministry of the Interior laboratory had devised a method of detecting cocaine
concealed in the fabric of clothing.
Cuban authorities did not interdict any narcotictrafficking ships in 1997. Seizures made in Cuban waters
were the result of drug traffickers failed "drops." In November, the Cuban state press said the GOC had
seized 5.7 tons of narcotics-most of it marijuana-in its waters and along its coastline. The same report
stated that twentyone foreigners were detained at Cuban airports for drug trafficking, which led to the
confiscation by Cuban authorities of 50 kilograms of cocaine.
Corruption. The GOC maintains that there is no evidence of narcoticsrelated corruption by government
officials. The Cuban penal code has significant penalties for public officials who engage in narcotic
activities or who use their public office to aid in the trafficking of narcotics.
Agreements and Treaties. The GOC and the USG share no bilateral antinarcotics treaties or
agreements. The US Cuba extradition treaty dates to 1904, but has not been used for many years. The
GOC did sign two new antinarcotics agreements with other countries in 1997. The GOC reported in
1997 that it was negotiating antinarcotics agreements with 22 countries and had bilateral antinarcotics
agreements with 17 countries. Cuba is a party to the WCO's International Convention on mutual
administrative assistance for the prevention, investigation, and repression of Customs offenses "Nairobi
Convention" Annex X on assistance in narcotics cases. Cuba is also a party to all of the UN narcotics
conventions.
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Cultivation/Production. Cuba is not a significant drugproducing country. Anecdotal information
suggests that a small quantity of marijuana is being grown around Havana and in eastern Cuba for
domestic consumers. The GOC published no reports regarding crop size estimates, crop yields, or
eradication efforts.
Drug Flow/Transit. According to GOC officials and press reports, transshipment of illegal narcotics in
1997 took place primarily in the waters off of Cuba's northern coast. In most cases, the narcotics are
dropped by aircraft crossing over east central Cuba, and taken to the United States by gofast boats
waiting nearby. US authorities have noticed a slight increase in the number of suspect aircraft entering
Cuban airspace from the south.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The USG and the GOC have no bilateral narcotics agreements. In 1997, the US
and Cuba continued to cooperate on a casebycase basis, sharing information in specific cases on aircraft
and vessels suspected of trafficking. In March, after significant cooperation by the GOC, including
providing four witnesses who testified at trial, a Miami jury found both defendants in the M/V
"Limerick" case guilty on all counts of trafficking 6.6 tons of cocaine.
The Road Ahead. The USG and the GOC will continue to cooperate on a casebycase basis. These
efforts are carried out by the relevant authorities, and consist primarily of realtime exchanges of
information on suspicious aircraft and vessels.
DOMINICAN REPUBLIC
I. Summary
The Dominican Republic is a significant transshipment point for drugs destined for the United States
and Europe. Traffickers smuggle narcotics through Dominican territory by air, sea, and along the
country's porous border with Haiti. A weak judicial system hampers efforts to combat the narcotics
trade, but promising reforms began in 1997.
The counternarcotics efforts of the Government of Dominican Republic (GODR) are consistent with the
objectives of the 1988 UN Drug Convention to which the GODR is a party. In September 1997, the
GODR and the USG signed an amendment to an August 1988 letter of agreement (LOA) on
counternarcotics cooperation, increasing USG funding in support of Dominican counternarcotics efforts
by $250,000.
In August 1997, the GODR extradited two Dominican nationals to the United States to stand trial on
charges of narcotics trafficking and homicide. The GODR has yet to act on a number of other US
extradition requests. The GODR cooperates closely on drug investigation matters with the USG.
II. Status of Country
The country's largely unpatrolled coast, its porous border with Haiti, and poorly paid and underequipped
security forces make it attractive to Colombian and Dominican trafficking organizations. The GODR
only achieved sporadic seizures, as it has not adequately motivated its police and military forces to join
in the struggle against the illicit drug trade. A weak judicial system hinders law enforcement efforts,
although dramatic and positive reforms occurred in the judicial sector in 1997. Narcotics traffickers are
using short flight routes between Bahamian islands and Dominican territory more frequently. Non-
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commercial vessels, including gofast and pleasure craft, remain the primary vessels of choice for drug
smuggling. The speed and range of gofasts allows traffickers to elude the Dominican police and
complete the voyage between the Dominican Republic and the Bahamas or Puerto Rico in less than one
day. The GODR participates in regional law enforcement meetings and other conferences organized by
USG and international agencies.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Despite the absence of a Comprehensive Master Plan, the GODR is committed to
fighting drug trafficking and consumption. In 1997, the GODR allocated approximately $3.5 million to
counternarcotics activities, including $2.6 million to combat drug trafficking, $780,000 for demand
reduction activities, and approximately $360,000 for rehabilitation and support projects. Under a 1988
letter of agreement and its subsequent amendments, the USG has provided approximately $3,950,000 in
counternarcotics assistance to the GODR over the last decade.
Accomplishments. In August 1997, President Leonel Fernandez, acting under Executive Authority,
extradited two Dominican nationals to the United States on narcotics trafficking and homicide charges.
These were the first such extraditions of nationals in many years.
Demand Reduction. The GODR's demand reduction programs enjoy strong support from senior
Dominican officials. The National Drug Council's (CND) demand reduction arm, PROPUID, continues
to operate under a joint grant from the Government of Spain, the European Union, and UNDCP. The
GODR, through programs administered through the Secretariat of Health and the Secretariat of
Education, and with strong private sector support, continues to focus attention on the treatment and
rehabilitation of addicts.
Law Enforcement Efforts. The Special Investigative Teams (SITS) of the National Drug Control
Directorate (DNCD) continue to conduct indepth investigations of major international narcotics
operations. The SITS are trained and equipped by the USG and provide valuable intelligence to all the
DNCD's enforcement arms on a casebycase basis. With US technical support, the DNCD has also
created a surveillance unit. The JICC, established in 1985, continues to be the most advanced unit in
Latin America. It has been instrumental in developing information leading to numerous arrests of drug
traffickers in the Dominican Republic and elsewhere. The DNCD and the Dominican armed forces
enjoy excellent cooperation. There was a decrease in marijuana seizures and arrests for drugrelated
offenses (1,481 arrests) in 1997, but an increase in heroin seizures (8.3 kgs). Cocaine seizures rose
slightly from 1996 (1,354 kgs.).
The DNCD has signed a Memorandum of Understanding (MOU) with the office of the Dominican
Attorney General outlining the relationship between prosecutors assigned to DNCD and their respective
offices. The prosecutors will actively participate in counternarcotics investigations. As a result, the
prosecutor's participation from the initial stages of an investigation all the way through indictment and
prosecution is assured.
Asset Seizure. The GODR's asset forfeiture unit under the CND confiscated $697,000 in US currency,
Dominican currency worth approximately $69,000, noncurrency assets valued at over $2 million, and 54
properties linked to narcoticsrelated crimes in the first nine months of 1997. The GODR seized three
US. registered airplanes, valued at $2.5 million, in connection with a major money laundering case.
The DNCD's newly formed Financial Intelligence Unit (FIU) will be instrumental in the development of
a database to pursue financial investigations. OAS/CICADbased money laundering and asset forfeiture
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legislation, adopted in 1995, provides for criminal penalties for money laundering as well as for seizure
of all "goods, products and instruments" of crime.
The Superintendency of Banks has responsibility and information gathering authority over all financial
institutions in the country, including exchange houses and remittance institutions. However,
implementation is lacking; questionable cases are not regularly referred to the DNCD for investigation.
Extradition. The USGGODR extradition treaty has been in effect since 1910; however, a 1969
Dominican law prohibits the extradition of its nationals. Although the USG has submitted more than 40
requests for provisional arrest and extradition in 1997, the GODR has yet to act on all but two. The two
who were extradited in August 1997 were extradited under Executive Authority. Some leaders,
including supporters of the extradition of Dominican nationals, criticized the Fernandez administration
for extraditing those suspects, maintaining that extradition should be part of a judicial process. USG and
GODR officials will continue to discuss ways to renegotiate the treaty.
Mutual Legal Assistance. The GODR does not participate in any mutual legal assistance programs.
There are two US letters rogatory requests now before the GODR.
Precursor Chemical Control. The GODR strictly controls the manufacture and use of precursor
chemicals. Both the DNCD and the Secretariat of Health and Social Services enforce these controls.
Although the GODR has no bilateral agreement with the USG on controlling precursor chemicals and
has not acceded to any such international agreement, detailed records are maintained and are available
for US inspection.
Corruption. The DNCD aggressively pursues and arrests individuals involved in the financing of illegal
activities and the sale and transport of illegal substances. Nevertheless, corruption and the inefficient
administration of justice have caused the pretrial dismissal of more than one hundred drug offenders
during 1997. Long delays and the failure of judges to be convinced by the evidence presented by law
enforcement officials reportedly continue to undermine convictions and asset seizures.
A new Supreme Court took office in August. The selection of the court's new members was transparent
and widely praised. The new Court has reduced its backlog of cases and has started to remove corrupt
and incompetent judges from lower courts.
Agreements and Treaties. The GODR has participated in the Caribbean Financial Analysis Task Force
(CFATF) since 1994. The United States and GODR signed a maritime counternarcotics operations
agreement on March 23, 1995, which allows temporary overflight authority through March 15, 1998. In
September 1997, the two governments signed a letter of agreement whereby the USG will provide
$250,000 for counternarcotics training and law enforcement related equipment. The GODR is a party to
all the UN narcotic conventions, including the 1988 UN Drug Convention.
Illicit Cultivation, Production, Distribution. The Dominican Republic is not a drug cultivating or
producing country.
Drug Flow/Transit. The GODR, in cooperation with the USG, has developed information showing that
traffickers smuggle thousands of kilograms of cocaine over the border from Haiti. The army, charged
with controlling the border, is not effective in combating crossborder narcotics traffic. Increased heroin
seizures at the Dominican Republic's international airports have occurred over the last two years. There
is inadequate counternarcotics coverage for most of the coastline and the country's interior.
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IV. US. Policy Initiatives and Programs
USGGODR cooperation in 1997 included information sharing through the JICC, special operations
targeting major international traffickers, and joint antinarcotics and antialien smuggling exercises. The
USG and GODR cooperate to develop Dominican institutions that can interdict and seize narcotics
shipments and conduct effective investigations leading to arrests, prosecutions, and convictions. In
1997, USG assistance focused on providing essential equipment and training, supporting the creation of
technical counternarcotics units, and efforts to incorporate prosecutors in all phases of drugrelated
criminal investigations.
In fiscal year 1997, the USG provided the GODR with $250,000 for training, equipment, fuel for vessels
and aircraft, technical assistance, and support for an antinarcotics program. The United Nations Drug
Control Program (UNDCP) has an active presence in the Dominican Republic and works with the
GODR and nongovernment organizations to improve demand reduction efforts. The USG supports the
DNCD's Joint Intelligence Coordinating Center (JICC) and provides technical assistance and equipment
to the DNCD's new Financial Investigative Unit (FIU). The USG and the GODR have been discussing
the negotiation of a new extradition treaty that would require the extradition of nationals.
The USG is helping the GODR design and fund a pilot program to modernize and improve criminal and
civil courts in the city of Santo Domingo. The GODR intend to use this program as the basis for future
reform and modernization of courts throughout the country. US. assistance to the Public Ministry, the
Dominican Republic's public prosecutors, has helped prompt the creation of an anticorruption unit and
development of strategies for the investigation and prosecution of high profile public corruption. Both
are prerequisites needed to confront the traditional impunity of public officials.
The Road Ahead. The USG and GODR will continue to engage vigorously in efforts to strengthen drug
control cooperation through increased sharing of information and closer working relations among
principal agencies. At the same time, the USG will encourage the GODR to adopt a national
counternarcotics master plan, streamline and modernize the extradition process, implement money
laundering legislation already enacted, and implement reforms in the administration of justice. The USG
will train the DNCD's new FIU and will work vigorously to reach agreement on procedures that provide
for a reliable process for the extradition of Dominican nationals to the United States. The USG will
continue to provide the support required to assure the enforcement of the maritime interdiction
agreement and will encourage the GODR to develop ways to cooperate with Haiti and other countries on
law enforcement, interdiction and alien smuggling.
click here for Dominican Republic table
GUYANA
I. Summary
Arrests, small seizures and other anecdotal evidence indicate that Guyana is increasingly being used as a
transshipment point for cocaine and other drugs. However, there is no evidence to establish that drugs
are coming to the US from Guyana in quantities sufficient to have a significant effect on the US. Law
enforcement authorities say that cocaine and marijuana traffickers are taking advantage of Guyana's
dense jungles, low population and weak infrastructure to avoid more heavily policed routes such as
Colombia. Although some marijuana is grown locally, especially in heavily forested and riverine areas,
Guyana is not considered to be a major producer of marijuana. Cocaine is not locally produced, but
enters Guyana by river, land, or airdrop from neighboring nations. Although the Government of Guyana
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(GOG) badly lacks resources, it has committed greater military and law enforcement resources to
interdiction. The GOG has asked for more intensive coordination with the US. Guyana is a party to the
1971 Convention on Psychotropic Substances and to the 1988 UN Drug Convention, but needs to pass a
wide range of legislation and implement it before it will be in compliance with the Convention's goals
and objectives.
II. Status of Country
Because of its dense jungles, low population and weak infrastructure and border control, there are
indications that Guyana is increasingly being used as a transshipment point for drugs. Many areas are
only accessible by air or river, and there are dozens of unmonitored airfields throughout the largely
uninhabited interior. Guyana produces some marijuana but does not produce cocaine.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Although badly hampered by lack of resources, the GOG continued to make efforts
to implement counterdrug programs. The establishment of the Joint Information Coordination Center
(JICC) was slowed early in the year by equipment and budgetary problems, but it should be fully
operational and coordinating national interdiction efforts by the middle of 1998. The GOG created the
elite Customs AntiNarcotics Unit (CANU), which quickly proved itself by making a number of highprofile smuggling and narcotics arrests.
Accomplishments. In June 1997, Guyana participated in the Summerstorm Caribbean multilateral antinarcotics exercise. Drug Abuse Resistance Education (D.A.R.E.) programs instituted in Guyanese
schools in 1996 produced their first course graduates in 1997. The GOG completed its drug master plan,
with assistance from UNDCP.
Law Enforcement Efforts. Through midNovember 1997, police and customs antinarcotics units
officials had arrested several smalltime traffickers and users and made several small seizures of
marijuana and cocaine. Because of recruiting and budgetary constraints, both the police and the armed
forces currently operate below their legally mandated personnel levels. This, along with budget and
equipment deficiencies, has severely hampered their ability to effectively enforce counterdrug measures.
Nearly all of the persons apprehended on drug charges are merely users or smalltime mules, and the
GOG has neither plea bargaining nor asset forfeiture legislation that would facilitate the apprehension of
larger drug ring operators or kingpins. The GOG hopes that the establishment of CANU, whose
members are better trained, equipped and motivated, may lead to an increase in major drug busts.
Corruption. Guyana has not put into place any particular legal measures to prevent and punish public
corruption connected to narcotics trafficking. However, those directly implicated in the past have been
brought to trial. Opposition politicians and some members of the antinarcotics community privately
alleged that drug traffickers bribed certain law enforcement officials into turning a blind eye to their
activities; such charges, however, have not been substantiated.
Agreements and Treaties. Guyana is party to the 1988 UN Drug Convention. The 1931 US UK
extradition treaty is still in force between Guyana and the US. Guyana and the UK maintain an
agreement to share narcotics intelligence and for limited assets seizure. The GOG has also signed an
overflight counternarcotics agreement with the US , but bureaucratic delays have kept both countries
from acting on its provisions.
Cultivation. There is some anecdotal evidence of cannabis cultivation in Guyana's interior, especially
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near small rivers, but exact amounts are difficult to estimate. Guyana's interior is very sparsely
populated, and police and the Guyana Defense Force (GDF) have difficulty locating these fields by air
because of the dense rainforest canopy. Most areas are inaccessible by land. From January through
November 1997, authorities destroyed 10 hectares of cannabis.
Drug Flow/Transit. Authorities believe that cocaine smugglers from neighboring countries make night
air drops into Guyana's interior, then move the product out to the Caribbean by river and onward to the
US. Over the last five years, military and civil air authorities have reported spotting an increasing
number of unauthorized aircraft, and they have discovered new, clandestine airstrips. There is evidence
to suggest that increasing quantities of cocaine are now transiting Guyana, as producers and traffickers
from the Andean countries search for alternatives to the now heavily policed Colombian and Venezuelan
routes. Officials say that a growing amount of foreign and locally produced marijuana is now moving
through Guyana. While there were no major busts in 1997 to numerically substantiate these beliefs,
DEA and other US experts believe these theories to be plausible.
Domestic Programs/Demand Reduction. There is some domestic consumption of marijuana, but use
of cocaine, crack cocaine, and heroin is still relatively rare. Nevertheless, the GOG has implemented
demand reduction programs in an attempt to head off serious problems before they develop. Police and
ministry of health officials conduct outreach with rural and urban youths and rehabilitation assistance for
addicts. The D.A.R.E. program, instituted in Guyanese schools in 1996, announced its first program
graduates this year. Guyana has a national drug council, which is examining ways of improving
counseling services and disseminating demand reduction information.
IV. US Policy Initiatives and Programs
Policy Initiatives. The US greatly broadened its counternarcotics efforts in Guyana in 1997. After
wrapping up a series of training programs and equipment transfers designed to rebuild the capacity of
the police force, the US embarked on new programs with the Joint Information Coordination Center
(JICC) and the elite Customs AntiNarcotics Unit (CANU). The US provided CANU and the JICC with
communications equipment, computer hardware and software and law enforcement and detection
equipment in 1997. Various US agencies also provided training in Guyana, in the US and on a regional
level. We also continued to provide the GDF with counternarcotics training assistance; the US provided
coast guard interdiction training in Guyana, as well as an array of stateside and regional training
applicable to counternarcotics work.
Bilateral Cooperation. Through these programs, formal US Guyana bilateral narcotics cooperation
made progress in 1997. Although still in its infant stages, these bilateral projects are beginning to make
inroads toward the elimination of illicit cultivation, processing, trafficking, consumption and export of
narcotics.
The Road Ahead. The US will continue to broaden its efforts not only in Guyana but also on a regional
level. Locally, we will continue to support the GDF, the JICC and CANU, and in 1998 we will look
toward developing regional counternarcotics cooperation with the Caribbean Community (CARICOM),
which is headquartered in Guyana. The US expects to assist the GOG in making the JICC fully
functional by mid1998. We will also assist the GOG in the expansion of its current antinarcotics
legislation. Passage of a money laundering law is expected in early 1998.
HAITI
I. Summary
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Haiti is a significant transshipment point for South American narcotics bound for the United States.
Drug traffickers from South America and the Dominican Republic, in collaboration with their Haitian
counterparts, continue to exploit Haiti's weak democratic institutions and novice police force. Despite
the challenges posed by the longestablished trafficking organizations, the Government of Haiti (GOH)
has committed itself to put the legal mechanisms and governmental policies to counter organized
trafficking elements. However, the political impasse that culminated with the June 9 resignation of
Prime Minister Rosny Smarth stymied implementation of the GOH's antidrug measures in 1997. The
GOH lacks the law enforcement capacity to effectively challenge organized drug trafficking. Although a
significant number of drugrelated arrests, including those of Haitian National Police (HNP) agents,
began to occur in November, the Haitian Justice Ministry has yet to demonstrate a capability to
prosecute those crimes. The US Coast Guard (USCG) cooperated with the Haitian Coast Guard (HCG)
in four separate maritime interdictions that yielded over 2 metric tons of cocaine during 1997. Haiti is a
party to the 1988 UN Drug Convention.
II. Status of Country
Haiti remains a transit country for drugs owing to its unprotected coastline, inexperienced police force,
moribund judiciary, thriving contraband trade, and weak customs oversight capability. Haiti's povertythe worst in the hemisphere-will continue to enable drug traffickers to enlist local associates and corrupt
GOH officials. Local drug consumption, while still not a significant domestic problem, is on the rise in
urban areas.
III. Country Actions Against Drugs in 1997
Policy Initiatives. GOH antidrug policy initiatives in 1997 centered largely on measures formulated by
the Ministry of Justice's Special Advisor on Narcotics Matters. In 1997, his office completed two
important pieces of draft legislation: comprehensive narcotics legislation updating Haiti's existing laws,
as well as Haiti's first money laundering legislation. The Special Advisor's office also drafted a National
Narcotics Plan. Unfortunately, the GOH has been unable to act on or approve these initiatives due to the
lingering political impasse.
With UNDCP support, the Minister of Justice (MOJ) in 1997 began work on the establishment of an
interministerial task force to unify the GOH's antinarcotics program and initiatives, as well as to act as
Haiti's focal point for complying with the 1996 Barbados Conference followup measures.
On the law enforcement front, the HNP Director General dismissed the previous head of the
Counternarcotics Unit (CNU) and partially restaffed the unit in early 1997. The unit completed several
USGsponsored training classes, and some unit members underwent overseas training in France. HNP
leadership participated in regional meetings with Caribbean counterparts, and Secretary of State for
Public Security initiated a cooperative law enforcement program with the Jamaican government. The
HNP Director General traveled to Washington, Paris and Ottawa to advance the HNP's law enforcement
objectives, which included counternarcotics initiatives within the framework of regional security
cooperation and intelligence sharing. In 1997, the HNP director general officially reestablished links to
Interpol. The HNP also drafted an internal Ministry of Justice directive outlining the procedures
governing seized narcotics to facilitate cooperation between police and judicial authorities. HNP and
Haitian Customs leaders developed policy guidelines aimed at furthering cooperation between the two
offices.
Accomplishments. The GOH and the USG signed a bilateral counternarcotics maritime accord on
October 17, 1997. The HCG and USCG ad hoc cooperative maritime efforts netted several significant
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seizures during 1997, and a second class of HCG recruits completed training and was successfully
integrated into the HCG's operations. The restaffed CNU completed training and was deployed to offices
at the National Police Academy to begin investigations.
Illicit Cultivation and Production. Haiti is not a major cultivating or producing country. The USG
received two unsubstantiated reports of small marijuana agricultural plots in two rural areas of Haiti in
1997; the last reports of isolated local marijuana production date to the de facto years (19911994).
Haitian law bans the cultivation, production, distribution, sale and possession of narcotics.
Money Laundering/Asset Seizure. The MOJ Special Advisor developed draft legislation for money
laundering as well as separate comprehensive narcotics legislation that includes an updated asset seizure
component.
Drug Flow/Transit. Drug seizures at Haiti's airports and seaports illustrate the gravity of the problem.
Haiti's international airports facilitate the transport of narcotics by body carriers and air cargo. In 1997,
Haitian Customs identified and arrested Haiti's first documented "swallower," a Colombian national who
arrived from Panama via a foreign air carrier. Highspeed boats known as "gofasts" transit between
Colombia and Haiti's south coast, while light aircraft make airdrops over land and sea. A portion of
Haiti's drug traffic transits through the Dominican Republic for onward transportation to the United
States, Canada, and Europe.
Law Enforcement Efforts. In 1997, the GOH made drug seizures that yielded over nine tons of
marijuana and 2.1 metric tons of cocaine. The HCG and the USCG made four cooperative seizures,
accounting for the majority of the cocaine seized. One benefit to the gofast seizures has been that the
HCG has added three vessels to its inventory. According to HNP statistics, the HNP made nearly three
dozen drug seizures around the country during 1997. At the PortauPrince International Airport, US air
carrier security personnel initiated a number of successful seizures during 1997, and Haitian Customs
interdicted two groups of passengers carrying drugs from Panama.
Corruption. Despite successful limited drugrelated arrests, the majority of narcotics cases go untried
and unpunished due to Haiti's corrupt and ineffective judicial system.
Haiti's constitution prohibits selfenrichment through the use of one's public office. To address concerns
that parliamentary officials might abuse their elected duties, anticorruption legislation is currently under
consideration by Haiti's parliament.
Drugrelated corruption is problematic within the HNP, the justice sector, and customs and port officials.
Trafficking organizations have successfully targeted all branches of government responsible for
supervising Haiti's airports, seaports, and bordercrossing points with the DR. Only the HNP's Inspector
General's office credibly investigates and sanctions police officers implicated in drug trafficking. One
HNP officer was released from service in 1997 for drug trafficking. In November 1997, the HNP
arrested a number of police and judicial officials for suspected complicity in drug trafficking.
The GOH does not encourage or facilitate illicit production or distribution of narcotic or psychotropic
drugs or other controlled substances, or the laundering of proceeds from illegal drug transactions. In
addition, the USG remains concerned over reports that Haitian officials have intervened in the release of
suspected drug traffickers.
Agreements and Treaties. Haiti is a party to the 1961 UN Single Convention and its 1972 protocol and
the 1988 UN Drug Convention. The Parliament has under review the 1971 Vienna Convention on
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Psychotropic Substances. The USG and the GOH signed a bilateral maritime counternarcotics
agreement on October 17, 1997, which will allow US law enforcement vessels and aircraft greater
access to Haitian territory in the pursuit and interdiction of narcotics traffickers.
An extradition treaty between the US and the GOH has been in effect since 1904; however, the 1987
Haitian Constitution prohibits the extradition of its nationals.
The Ministry of Foreign Affairs is reviewing the OAS Mutual Legal Assistance Treaty (MLAT), which
if ratified by the USG and GOH could facilitate greater bilateral law enforcement cooperation.
Domestic Programs/Demand Reduction. The GOH's limited budget does not allow for financing of
demand reduction programs. A private nongovernmental organization, the Association for Alcohol
Prevention and Chemical Dependency (APAAC), remains the only established NGO with treatment
programs for drug and alcohol dependency.
In 1997, a UNDCP consultant surveyed GOH health and social workers, members of the donor
community, police officials as well as local NGOs, and concluded that there exists a perceptible increase
in local drug consumption. UNDCP plans to sponsor limited demand reduction activities over the next
three years in support of existing government and NGOsponsored health and education programs. Law
enforcement and Justice officials echo growing public concerns over increased drug availability and use
in Haiti, and related violent crime that accompanies narcotics trafficking and drug abuse.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The USG and GOH streamlined ad hoc cooperation on maritime operations in
1997. In only one case during 1997 did the lack of advance GOH authorization deter the interdiction of a
suspect drug vessel.
The USG and GOH signed a Letter of Agreement (LOA) for the use of 1997 funds in support of
counternarcotics activities primarily focused on the continued development of both the HCG and the
CNU.
The USG's twoperson DEA office worked with HNP, a US air carrier security personnel as well as GOH
airport security officials in the support of narcotics seizures.
The Road Ahead. Developing the narcotics interdiction capability within the HNP remains a USG
priority, as does assistance to judicial, customs, and port authority officials as deemed appropriate. Once
a new Prime Minister and a new government are installed, the MOJ's legislation can be submitted for
parliamentary approval and a National Narcotics Plan approved at the cabinet level. The USG will urge
parliamentary ratification of the signed maritime agreement, as well as passage of the draft legislation
developed by the Ministry of Justice. The USG will press for approval of a National Narcotics Plan, and
will assist the GOH in the adoption of other Barbados Conference initiatives.
The USG will continue to assist the GOH with the expansion of the HCG as well as the successful
implementation of the signed maritime accord. Additionally, the USG and Canadian Coast Guards will
continue to support their training and technical advisor team. The USG will remain engaged in
improving the overall security of the PortauPrince Airport to inhibit the flow of drugs via air links to the
US. Additional USG counternarcotics objectives for Haiti include targeting at least one major
international narcotics organization for significant interdiction efforts, continued training for the CNU
and instituting steps to combat corruption within the ranks, and enacting civil and administrative asset
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forfeiture provisions to facilitate targeting of trafficker assets and companion legislation requiring use of
the forfeited funds solely for counternarcotics interdiction and enforcement operations.
JAMAICA
I. Summary
Jamaica is a producer of marijuana and an increasingly significant cocaine transshipment country. The
Government of Jamaica (GOJ) made some progress during 1997 toward meeting the goals and
objectives of the 1988 UN Drug Convention, to which it became a party in December 1995, and of our
bilateral cooperation agreements and treaties. Counterdrug cooperation between DEA and the Jamaica
Constabulary Force (JCF) remained at high levels, and cannabis eradication increased from 473 hectares
in 1996 to 683 hectares in 1997, despite severe resource constraints. In October, parliament passed a
master national drug abuse prevention, and control plan which complies with the OAS/CICAD model.
Many important actions, however, still remain to be taken by the GOJ to fully meet the counterdrug
goals and objectives.
During 1997, the GOJ extradited to the US three Jamaican national fugitives from US justice, compared
to 1996, when the GOJ returned one Jamaican national under a waiver of extradition, one US Jamaican
dual national who returned voluntarily, and six US national fugitives who returned voluntarily or were
deported to the US. One US national died in Jamaica in 1996 while extradition proceedings were
pending. The US seeks early resolution of the 26 active extradition cases currently pending with
Jamaica. Although both countries have begun to utilize the bilateral Mutual Legal Assistance Treaty
(MLAT), Jamaica needs to speed up its execution of US mutual legal assistance requests.
By year's end, the GOJ had not yet tabled in parliament any precursor and essential chemical control
legislation. In September 1997, however, the GOJ signed with the USG a letter of agreement (LOA)
which details USG counternarcotics assistance to be provided and GOJ actions to be taken. This
agreement includes a GOJ commitment to introduce into parliament a precursor chemical control law by
April 1998.
In November 1997, the GOJ amended its 1996 antimoney laundering law to mandate reporting of all
cash transactions of US $10,000 equivalent or more. Previously, the law incorporated a threshold
reporting requirement for all transaction types. Further amendments are required to bring Jamaica into
full compliance with the recommendations of the Caribbean Financial Action Task Force (CFATF).
Although there are four cases pending, to date there has been no adjudication of money laundering
cases. The GOJ has commenced forfeiture proceedings against one convicted drug trafficker, though no
trafficker assets have yet been forfeited under its 1994 law, nor has it provided for earmarking of
forfeited assets for counterdrug purposes.
In the area of drug enforcement, GOJ drug arrests and cocaine and hashish oil seizures increased in 1997
from 1996 levels, but marijuana seizures were down substantially. A maritime law enforcement
cooperation agreement was signed by the GOJ and USG in May 1997, but is not yet in force pending
required GOJ actions, including parliamentary passage of enabling legislation which is expected in
February 1998. The GOJ needs to reinvigorate the previously successful joint Jamaica Constabulary
Force (JCF)DEA Operation Prop Lock, which seized only one trafficker plane during 1997, and that had
to be returned to its owner for lack of probable cause.
Drugs in export shipments continued to threaten Jamaica's legitimate commerce during 1997. At GOJ
invitation, US agencies conducted an export security assessment and recommended remedial actions to
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improve security at air and seaports. The GOJ needs to carry out these recommendations. During 1997,
there were reports in the Jamaican media about drugrelated corruption of police and a resident
magistrate, the latter of whom was arrested on corruption charges. The GOJ also needs to take strong
steps to control drugrelated public corruption. A wideranging bill dealing with corruption of public
officials was tabled in parliament, with passage expected in early 1998.
Parliamentary passage of introduced and planned legislation and its vigorous implementation will be
necessary for Jamaica to meet fully the goals and objectives of the 1988 UN Drug Convention and the
terms of our bilateral agreements and treaties.
II. Status of Country
Jamaica, the foremost producer of marijuana in the Caribbean, is both a marijuana source country and a
significant transit country for illegal drugs destined for the US. As Jamaica is midway between South
American source countries and the US , at the maritime crossroads of the Caribbean, it is very attractive
to drug smugglers. During 1997, cocaine trafficking patterns through the Caribbean shifted towards the
west, causing an increase in activity along the Jamaica/Cuba/Bahamas vector. The primary
transshipment method is by high-speed "gofast boats" which move drugs through the Windward Passage
and into The Bahamas for onward shipment to the United States. "Gofast boats" have replaced airdrops
as the major trafficking threat in Jamaica. Based on information derived from US and Jamaican law
enforcement sources, there is an increased presence in Jamaica of Colombian traffickers involved in the
transshipment of multikilogram loads of cocaine through Jamaica. Jamaicanbased traffickers also
smuggle drugs to the US and elsewhere via commercial airlines through the use of couriers known as
"mules," who carry contraband in their clothing, attached to their skin, ingested, or hidden in their
luggage.
III. Country Actions Against Drugs in 1997
Policy Initiatives. In October 1997, the Jamaican parliament passed the master drug plan, a
comprehensive fiveyear plan focusing on supply and demand reduction by applying an integrated
strategy involving all relevant ministries. The strategy seeks to minimize the profits from marijuana
cultivation and trafficking. The master drug plan complies with the OAS/CICAD model.
Accomplishments. In November 1997, the Jamaican parliament passed legislation amending the 1996
antimoney laundering law to mandate reporting of all cash transactions of US $10,000 equivalent or
more. Previously, the law incorporated a threshold reporting requirement for all transaction types.
Further amendments are required to bring the law into full compliance with the recommendations of
CFATF.
In September 1997, Jamaica signed a letter of agreement (LOA) with the USG amending the
international narcotics control project agreement signed in August 1988. Amended annually since 1988,
the LOA reflects a tradition of cooperation between the USG and the GOJ in narcotics control
operations.
Despite its initial negative perception of a proposed bilateral maritime treaty, the GOJ signed a maritime
cooperation agreement with the USG in May 1997. In November 1997, legislation that would allow the
entry into force of the maritime agreement was submitted to parliament but not enacted before
parliament was dissolved for national elections. Passage of the legislation is expected in February 1998.
The US Coast Guard (USCG) and the JDF Coast Guard (JDFCG) have already undertaken joint training
in preparation for the passage of this legislation. Joint procedures are in place to ensure that upon the
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passage of the enabling legislation transit zone interdiction operations can begin.
Law Enforcement Efforts. DEA reports that counternarcotics cooperation with the JCF remains at high
levels. JCF drugrelated arrests increased from 3,263 in 1996 to 3,364 in 1997. However, DEAinitiated
cases in 1997 resulted in 66 arrests in 1997, versus 90 in 1996. DEA attributes the drop to staffing gaps
within the DEA office during 1997.
According to DEA records, Jamaica has 73 operational airfields, approximately 41 of which are legal.
The GOJ officially closes the remaining airstrips to prevent illegal use; however, drug smugglers
remove barriers and sometimes repave runways in order to utilize them illegally.
Operation Prop Lock, an ongoing operation of the DEA and JCF that seizes suspected trafficking aircraft
of US registry and returns the aircraft to the US for forfeiture, was not successful during 1997 due to a
lack of timely and specific intelligence necessary to satisfy local due process requirements for probable
cause to seize suspected aircraft. In 1997, one aircraft was seized by the JCF narcotics division.
However, pursuant to a court order citing lack of probable cause, the aircraft was returned to its owner.
Precursor Chemical Control. Jamaica is not a source of precursor or essential chemicals used in the
production of illicit narcotics. The GOJ has not passed a precursor chemical law, but in the 1998 LOA
the GOJ agreed to introduce into parliament a precursor chemical law by April 1998. In October 1997,
the GOJ requested and received precursor chemical training from DEA representatives.
Extradition. During 1997, the GOJ extradited to the US three Jamaican national fugitives from US
justice, compared to 1996, when the GOJ returned one Jamaican national under a waiver of extradition,
one US Jamaican dual national who returned voluntarily, and six US national fugitives who returned
voluntarily or were deported to the US. One US national died in Jamaica in 1996 while extradition
proceedings were pending. The US seeks early resolution of the 26 active extradition cases currently
pending with Jamaica. US Department of Justice officials met with Jamaican officials in Kingston in
1997 to go over all details of the pending extradition cases. Of the 26 pending cases, nine cannot
proceed until the US provides additional documents. Delays in final decisions in extradition cases are
caused in part by Jamaican due process requirements and the difficulties in scheduling court dates and
appeals, compounded by the small number of criminal attorneys handling extradition cases. The due
process protections afforded Jamaican criminal defendants and an overburdened court system mean that
extradition requests can take from four to five years to fully litigate.
Mutual Legal Assistance. Jamaica has a mutual legal assistance treaty (MLAT) with the US. Both
countries have begun to utilize this treaty in combating illegal narcotics trafficking and other crimes.
Jamaica has been slow in executing mutual legal assistance requests due, in part, to deficiencies in
Jamaica's domestic legislation, most of which have been remedied. The USG has recently received
assistance from Jamaica in two cases. Jamaica has also entered into an MLAT with some 48 designated
Commonwealth states.
Demand Reduction. Jamaica has several active demand reduction projects in place. The UNDCP is
active in Jamaica and works directly with the GOJ and NGOs to improve demand reduction efforts. Two
of the most highly visible projects are those of the National Council on Drug Abuse (NCDA) and the
NGO Addiction Alert. The UNDCP has funded an integrated demand reduction program managed by
the NCDA. Addiction Alert has received USG funding for its adolescent drug prevention program. The
GOJ has used extensively the audiovisual, print media and other materials produced by US Military
Information Support Teams (MIST) deployed in country. The MIST teams have worked closely with
national demand reduction agencies to develop and distribute materials reinforcing an antidrug message.
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Money Laundering. Jamaica is not considered an important regional financial center, an important tax
haven or offshore banking center. However, money laundering does occur. DEA reports that drug
money is laundered primarily through used cars, rentacar establishments and real estate investments.
Drug money laundering was criminalized by the passage of a weak antimoney laundering statute in
December 1996. In November 1997, the GOJ amended the law to require reporting only of cash
transactions of US$10,000 equivalent or more. Previously, the law incorporated a threshold reporting
requirement for all transaction types. Further amendments to the law are needed to bring it into full
compliance with the recommendations of CFATF. In July 1997, Jamaica signed the CFATF
Memorandum of Understanding (MOU) but with interpretative notes regarding the legally nonbinding
status of the CFATF recommendations.
Although there are four cases pending, to date there has been no final adjudication of money laundering
cases.
Corruption. Jamaica does not as a matter of government policy encourage or facilitate the illicit
production or distribution of narcotic or psychotropic drugs or other controlled substances, or the
laundering of proceeds from illegal drug transactions. The GOJ recently charged a resident magistrate
with malfeasance in a prominent drug case. This is the first judicial official arrested on corruption
charges in recent history. As a matter of policy, the GOJ prosecutes individuals who by reliable evidence
are linked to drugrelated activity. The Jamaican media has reported allegations of narcotics trafficking
among police officers. These police officers have subsequently been transferred to other areas pending
investigations. In November 1997, the government tabled in parliament a wideranging bill dealing with
corruption of public officials, passage of which is expected in January 1998.
Illicit Cultivation and Production. The JDF and JCF continue to cooperate on eradication operations
utilizing their limited resources as well as US provided helicopters. The 1996 and 1997 LOAs set a
cannabis eradication goal of 800 hectares. In 1997, these operations resulted in the destruction of 683
hectares of cannabis, up from the 1996 level of 473 hectares. The eradication operational tempo was
maintained throughout 1997, notwithstanding aging helicopters and minimal funding for maintenance.
After cutting, the amount of cannabis eradicated is tallied by the JDF and JCF field officers. Eradication
data are analyzed and compiled by parish (district) into a monthly report. Jamaica's terrain and climate
conditions allow for an uninterrupted harvesting of cannabis. Crops are usually planted along the hills
and valleys of remote areas that have limited road access. Farmers continually devise ingenious ways of
concealing cannabis. New strains of cannabis can be grown and harvested in as little as six weeks. Its
current street value is US $8001000 per pound, which makes cannabis much more profitable than other
crops. In addition to cannabis eradicated, GOJ authorities seized and destroyed 24 metric tons of
marijuana, down from 52.99 metric tons seized in 1996. In 1997, cocaine seizures totaled 414 kg, up
from 236 kg in 1996; hash oil seizures totaled 383 kg, up from 263.41 kg in 1996; and hashish seizures
totaled 67 kg, up from 48 kg in 1996.
As a matter of public policy and reflecting popular opinion, Jamaica is opposed to aerially applied
herbicide as a means of eradicating cannabis. Manual cutting is the method utilized. Growers routinely
interplant cannabis among legitimate crops. The GOJ and the environmental community believe that
aerial spraying of herbicide would cause longterm ill effects to individuals and the environment.
The GOJ has formally requested USG assistance in conducting an aerial survey to determine the actual
number of hectares under cannabis cultivation. This will enable both governments to set an appropriate
eradication goal and more efficiently use air assets to move cutting teams to remote target areas. The
GOJ also seeks US assistance to improve detection of clandestine airfields.
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Regional Law Enforcement Cooperation. The Caribbean Regional Drug Law Enforcement Training
Center (REDTRAC) in Jamaica, built largely with USG funds, continues to provide training for police
officers and other professionals from throughout the Caribbean. Since November 1996, 284 officers
from 18 member countries within the Englishspeaking Caribbean have completed courses. The GOJ, the
European Union and UNDCP contribute to the counternarcotics training courses conducted at the
REDTRAC center. US law enforcement agency personnel also serve as trainers.
Jamaica has established financial investigative units in the office of the director of public prosecutions
and in the police. In December 1997, the US Treasury Department's Financial Crimes Enforcement
Network (FinCEN) conducted a oneday training audit with the financial investigative units and banking
industry, and will make recommendations on the structure and training needs with some training
expected to take place in early 1998.
On November 14, 1997, Jamaica signed the OAS InterAmerican Convention against the Illicit
Manufacturing and Trafficking in Firearms, Ammunition, Explosives and Other Related Materials. In
response to a request made by the GOJ, in September 1997, the Bureau of Alcohol, Tobacco and
Firearms (ATF) conducted an incountry analysis of firearms trafficking. As a result, the JCF and USG
are cooperating to identify and trace illegal firearms found in the country. Since drug trafficking and
illegal weapons in Jamaica are problems that could exacerbate each other, we hope this US Jamaica
cooperation on firearms also will have a positive impact on drug trafficking operations.
In April 1997, by request of the GOJ, a USG law enforcement team consisting of US Customs Service
(USCS), ATF, and USCG conducted a security audit of Jamaica's airports and seaports. Jamaica has
utilized the survey to enhance port security procedures. The Jamaican Customs, Ports Security Corps,
Contraband Enforcement Team (CET) and some JCF officers have requested further customs training in
February 1998 in narcotics interdiction and antismuggling enforcement methods.
Throughout most of 1997, Jamaica's Joint Intelligence Coordination Center (JICC) has been unable to
communicate with the El Paso Intelligence Center due to technical problems. The USG has installed
software and computer upgrades and provided training. In November 1997, the Jamaica JICC became
fully operational again. Jamaica has continued to cooperate operationally and to provide intelligence to
DEA, USCS and ATF. Jamaica generally responds, within the limits of its available resources, to US provided intelligence tips regarding maritime and air events.
DEA indicates that in 1997, the JCF narcotics division reported 31 arrests of major narcotics traffickers,
defined by the JCF narcotics division as persons arrested for narcotics violations where the total street
value of drugs seized is approximately US$29,000 equivalent.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The GOJ publicly states its commitment to combating illegal drugs. The USG
has provided funding for GOJ counterdrug efforts continuously since 1987. US Department of State
counterdrug funding for Jamaica, 19871997, exceeds that provided to any other Caribbean nation.
Nevertheless, Jamaica operates under severe resource constraints, with half of its national budget going
for debt repayment alone. Despite limited resources, 1997 saw some improvement in GOJ counterdrug
activity. The signing of a bilateral maritime agreement, parliamentary enactment of a national antidrug
master plan and GOJ commitments made in the LOA were positive steps against drugs. On the
operational level, Jamaican cooperation with DEA and FBI remained positive. The US hopes that
bilateral maritime cooperation will improve when the new maritime agreement enters into force.
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The Road Ahead. In order to improve cooperation with the US and make further progress against drug
trafficking, Jamaica will need to take several steps: passage and implementation of the laws it has
drafted (or similar legislation) pertaining to public corruption, money laundering, and precursor
chemical control; judicial reform to facilitate extradition matters, making substantial inroads into the
current backlog of cases; swifter mutual legal assistance cooperation in matters involving bank records;
and improved performance of the judicial system in drug trafficking cases.
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International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
SOUTHWEST ASIA
AFGHANISTAN
I. Summary
Afghanistan continued as the world's second largest producer of opium poppy, according to USG
estimates. Opium gum production was approximately 1,265 metric tons (MT) in 1997, slightly above the
1,230 MT produced in 1996. Continued warfare, destruction of the economic infrastructure and absence
of a recognized central government with administrative control over the entire country remain obstacles
to effective drug control.
Other major impediments to meaningful counternarcotics progress include inaction and lack of political
will of the Taliban faction, which controls 96 per cent of Afghanistan's opiumgrowing areas, as well as
substantial drug trade involvement on the part of some local Taliban authorities. An estimated 95
percent of Afghanistan's opium poppy cultivation and most of Southwest Asia's morphine base and
heroin processing laboratories are located in territory controlled by the Taliban.
The Taliban, formed by religious students, began its military campaign in Afghanistan in 1994 and
assumed effective control over two thirds of the country in fall 1996. The Taliban condemned illicit drug
cultivation, production, trafficking and use in 1997, but took no action to decrease poppy cultivation or
to eliminate opiate processing laboratories. The Taliban called for international alternative development
assistance as a precondition to eradicating opium poppy cultivation.
Narcotics remain Afghanistan's largest source of income, and Taliban authorities reportedly benefit
financially from the trade and provide protection to heroin laboratories. However, in November 1997,
the Taliban responded to a UNDCP initiative by agreeing to eliminate poppy cultivation in districts
where alternative development was provided, to control poppy cultivation in areas where poppy was not
previously grown and to eliminate morphine and heroin laboratories when these sites were brought to
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their attention. To date, these commitments have not been tested. If this agreement is implemented, by
November 1998, no poppy would be sown in districts that have benefited from alternative
development/poppy reduction projects.
There was no indication that major narcotics traffickers were arrested and prosecuted or that any effort
was made to interdict large shipments of illicit drugs or precursor chemicals anywhere in Afghanistan in
1997. Afghanistan is a party to the 1988 UN Drug Convention.
II. Status of Country
Afghanistan is the world's second largest opium producer. Afghanistan's porous borders with Pakistan,
Iran and Central Asian countries, combined with its rugged topography and an absence of narcotics law
enforcement, make it one of the world's least controlled narcotics trafficking areas. Numerous morphine
base and heroin laboratories operate in Afghanistan, primarily in Kandahar and Nangarhar Provinces
along the Pakistani border. Large quantities of precursor chemicals reportedly enter Afghanistan from
Central Asia, Europe and India. Afghanistan's wartorn economy cannot accommodate sophisticated
money laundering schemes. Except for Badakshan Province in northern Afghanistan, there is no
indication of major abuse of hard drugs.
III. Country Actions Against Drugs in 1997
Policy Initiatives. No national government exists in Afghanistan, so there were no countrywide
initiatives in 1997. The Taliban authorities control twothirds of Afghanistan, and the Northern Alliance
of antiTaliban factions controls the remaining third. Until November 1997, the Taliban reaffirmed the
previous year's stated policy of opposition to drug cultivation, production, trafficking and use, although
it did not directly and explicitly ban opium poppy cultivation. At the same time, it adhered to the
position that it was unable to reduce opium poppy cultivation, close down processing laboratories or
interdict drug traffickers without assistance from the international community. Taliban authorities took
no steps on their own, even in instances when they were capable of doing so, to close down drug
processing laboratories or arrest drug traffickers. There are numerous reports, moreover, of drug
traffickers operating in Taliban territory with the consent or involvement of some Taliban officials.
Accomplishments. There is no indication that any significant drug control was accomplished in
Afghanistan in 1997. The estimated three percent increase in opium poppy cultivation in 1997
demonstrated that Taliban statements last year condemning illicit narcotics growth had no effect.
Despite the Taliban's announced cannabis cultivation ban in territories, which they control, cannabis
production reportedly continued at high levels in 1997. The Taliban authorities claimed they would
destroy drug-processing laboratories, but there is no evidence of Taliban efforts to eradicate these
laboratories.
Law Enforcement Efforts. Although Afghanistan lacks a central government, the Taliban established
de facto control over almost all opiumgrowing territories. Taliban authorities, however, have taken no
significant law enforcement action against narcotics. The US Embassy in Pakistan reports that while
there were wellpublicized drug processing lab closures during a UNDCP visit to Taliban territory, these
closures were a sham put on for visitors. The labs were reported to have begun functioning again shortly
after the UNDCP visit. In 1997, the Taliban faction reactivated the State High Commission for Drug
Control, with headquarters in Kabul and drug control and coordination units in Kandahar and Jalalabad,
which were originally initiated and supported by UNDCP. Originally established in 1990, the State High
Commission is to coordinate and monitor all narcotics control matters. It reports directly to the Taliban
Supreme Council in Kandahar. The Commission is responsible for ensuring that drug control measures
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sanctioned by the Taliban Supreme Council are implemented.
During 1997, an unverified report indicated that Taliban police (acting on a tip) intercepted a vehicle
transporting 904 kilograms of refined heroin enroute between Kabul and Kandahar. The USG has been
unable to confirm this report, and is unaware of any other seizures. The heroin was supposedly burned
outside Kandahar, and the individuals transporting the drug were alleged to have been arrested and
jailed.
UNDCP shelved a project proposal to develop Afghanistan's narcotics law enforcement capability in
1997, in part because the country lacked sufficient infrastructure to make the project feasible. In
addition, the project was not consonant with the guideline of the UN's Executive Commission for
Humanitarian Activities, which stated that UN agencies will not be involved in "institutionbuilding"
efforts of the Afghan authorities as long as these authorities continue discriminatory practices. The
UNDCP also aims to create drug control and coordination units in Herat and MazariSharif (located in
territory controlled by the Northern Alliance).
Corruption. During 1997, there were reports that all warring factions in Afghanistan derived revenue
from illicit drug activity. There is evidence that the Taliban, which control much of Afghanistan, have
made a policy decision to take advantage of narcotics trafficking and production in order to put pressure
on the west and other consuming nations. As the Taliban expanded their control over Afghanistan's
opiumgrowing territory, they appear to have expanded their drug involvement as well, including
facilitating major traffickers to move large quantities of morphine base and heroin to the West. The
Taliban admitted that, as a result of the Islamic tithing practice, called "usher," local mullahs receive 10
percent of the income earned by farmers, including opium farmers. Opium is the leading cash crop, and
a large percentage of the Taliban's taxes is from the profits of poppy production. There were reliable
reports, denied by the Taliban, that morphine base and heroin laboratory operators paid a tax to some
local Taliban officials and that a road tax was levied against the value of goods being transported,
including illicit drugs. There is no reliable information regarding drugrelated corruption among Northern
Alliance authorities.
Treaties and Agreements. Afghanistan is a party to the 1988 UN Drug Convention, but lacks a national
government to implement the country's obligations.
Cultivation and Production. USG figures indicated an estimated 3 percent increase in opium poppy
cultivation from 37,950 hectares in 1996 to 39,150 hectares in 1997. Opium production increased by an
estimated 2 percent, from 1,230 metric tons in 1996 to 1,265 metric tons in 1997. According to USG
data, poppy cultivation increased most dramatically in Oruzgan and Kandahar Provinces, while it
decreased in Nangarhar Province. Helmand and Nangarhar Provinces continued to dominate poppy
production in Afghanistan. Helmand produced 55 percent of the total poppy crop for Afghanistan in
1997, and Nangahar 19 percent.
Drug Flow/Transit. Heroin and morphine base flow out of Afghanistan into Iran, the Central Asian
Republics, Pakistan and India. Some morphine base transits Iran enroute to Turkey where it is refined
into heroin, while other Afghan opiates enter Pakistan in North West Frontier and Baluchistan Provinces
for sea shipment to Turkey via the Makran Coast. During 1997, there were indications of increased flow
into the Central Asian republics.
Demand Reduction. Drug abuse reportedly is rampant in Badakshan province, controlled by the
Northern Alliance faction, although local authorities claim that addiction is decreasing. Only one of
Badakshan's two drug treatment facilities remains operational. Some drug use occurs in Afghanistan's
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larger cities, especially Kabul. The Taliban prohibit the use of illicit drugs and maintain that use of any
intoxicant is contrary to Islamic law. Although drug treatment programs do not now exist in Talibancontrolled areas, toward the year's end, Taliban authorities said that firsttime offenders would be
regarded as suffering from an illness and treated accordingly, but punished if they "relapsed." Up to this
point the practice has been to administer corporal punishment to drug users publicly. UNDCP plans to
begin implementing a demand reduction program in Afghanistan in 1998.
IV. US Policy Initiatives and Programs
In meetings with Afghan faction leaders, USG representatives continued to stress the need for Afghans
to address narcotics control in keeping with international norms of behavior and their obligations under
the 1988 UN Drug Convention. Building on an earlier crop substitution program, the USG provided an
initial $269,202 of a $772,905 poppy reduction/alternative development project being implemented by
an American nongovernmental organization (NGO), Mercy Corps International (MCI) in Helmand
Province. The twoyear project's objective is to eliminate poppy cultivation in the areas benefiting from
assistance.
Also in 1997, the USG transferred $1.6 million in FY95 and FY96 funds earmarked for UNDCP to help
finance UNDCP's capacity building project and poppy reduction projects in Afghanistan. The capacity
building project is to establish a UNDCP counterpart entity, Drug Control and Coordination Units
(DCCU) in Afghanistan which UNDCP and donors could use as a liaison with Afghan authorities. The
DCCUs are to be formed in Jalalbad, Kandahar, Kabul, Herat and MazariSharif. The units are designed
to plan, monitor and later implement drug control activities, such as conducting poppy surveys. Units
have now been established in Kandahar and Jalalabad. UNDCP will sponsor workshops in December
and February to design DCCU work plans. Project donors have had concerns about this project because
of the question of "institution building."
The poppy reduction/alternative development projects are located in Kandahar and Nangarhar provinces.
UNDCP is revising plans for the Kandahar project to include rehabilitation of a textile factory in
Kandahar City that will employ up to 800 people. In recognition of the need to promote human rights
(especially with regard to gender issues), UNDCP obtained an initial agreement by the Taliban
Governor of Kandahar province to employ women in the factory, although press reports quote the
Governor as saying that the agreement was "in principle" and that the decision depended on the
condition of the factory. UNDCP also is trying to fill more of its own project implementation positions
in Afghanistan with women. The MCI and UNDCP poppy reduction projects will test the Taliban's
commitment to eliminate opium poppy cultivation.
In October 1997, UNDCP's Executive Director proposed a comprehensive alternative
development/poppy reduction program, to be funded by UNDCP's major donor nations, which would
target all poppy growing areas of Afghanistan. At an estimated cost of $25 million a year for ten years,
the program's goal is to eliminate poppy cultivation entirely within that period of time. The project
would begin with a small investment to test the authorities' political will to eradicate if alternative
development is successful. USG counternarcotics objectives for Afghanistan include reduction and
ultimate elimination of poppy and cannabis cultivation, denial of safehaven to narcotics processing
laboratories, and arrest and conviction of couriers and traffickers in drugs and precursor chemicals.
The Road Ahead. In 1998, the USG will focus on the Taliban authorities' commitment to control poppy
cultivation and to destroy morphine base and heroin laboratories. The USG will continue to coordinate
its counternarcotics efforts with UNDCP, other members of the international donor community and with
NGOs. The Drug Enforcement Administration (DEA) will expand contacts with Afghanistan's meager
drug enforcement elements and continue to offer cooperation. The US will also engage leaders of the
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"Northern Alliance" to elicit counternarcotics commitments.
BANGLADESH
I. Summary
Bangladesh is not a significant producer of narcotics and does not appear to be a major route for
transshipment. In fact, the limited transshipment of narcotics through Bangladesh is surprising,
considering the proximity of Burma, and shipping links to South Asia. Bangladesh may not be attractive
for transshipment due to its poor transportation infrastructure. Alternatively, we may lack good data
because of poor narcotics enforcement. Enforcement efforts in Bangladesh have been characterized by
inefficiency, limited resources, and insufficient coordination between agencies. The Department of
Narcotics Control (DNC), under the Home Ministry, is the lead government agency attempting to
address problems of enforcement. There is no evidence to suggest that narcotics transiting Bangladesh
reach the US in any significant amount.
Bangladesh is a party to the 1988 UN Drug Convention, the 1961 UN Single Convention on Narcotics
and its 1972 Protocol, and the 1971 Convention on Psychotropic Substances, and is a member of the
South Asian Association for Regional Cooperation (SAARC) Convention on Narcotics. Bangladesh has
strict laws against producing and trafficking of narcotics, and UNDCP has been assisting the
Bangladeshi government (BDG) to improve intragovernmental cooperation and to draft more effective
legislation. The US has not entered into any bilateral narcoticsrelated agreements with the Bangladeshi
government. In 1997, United States provided support through visits of DEA officials and a grant of
communications equipment.
II. Status of Country
Geographically and culturally, Bangladesh marks the transition between Southeast Asia and South Asia.
Bordering Burma and India, with air and shipping links to Pakistan, Bangladesh would appear to be an
ideal transit route for narcotics coming from the major producers of Southeast Asia going on to other
areas of South Asia. The lack of border controls and effective law enforcement increases the likelihood
of such transshipment. The fact is we simply aren't sure whether Bangladesh is being used as a transit
country, given the present level of counternarcotics enforcement. Weak transportation infrastructure
may have inhibited use of Bangladesh as a route in the past. However, there were improvements in 1997
of the infrastructure, which may facilitate future movement of narcotics. Greater political stability
during 1997 allowed Bangladesh's two major shipping ports to avoid the debilitating political strikes and
blockages of previous years. The Jamuna Bridge project is nearing its completion date of June 1998.
Once complete, EastWest vehicle traffic will no longer be delayed at the few ferry points on the Jamuna
and Padma rivers. We will be watching closely for any indication of drugs entering the US from
Bangladesh.
There are no reliable figures for drug abuse in Bangladesh. The UNDCP recently conducted a national
survey of drug abuse patterns, but was unable to obtain an accurate picture because addicts' fears of
admitting to drug usage. UNDCP estimates range from 100,000 to 1,000,000 drug abusers. Regardless
of the exact number, UNDCP and BDG officials believe the trend is towards increased drug abuse. In
1997, the DNC reported seizure rates for most narcotics were above those of 1996. The quantity of
heroin seized was approximately four times greater than last year, but still relatively modest at some 7
Kgs. The number of arrests for possession of phensidyl, an inexpensive codeine based cough syrup, was
approximately twice that of 1996. It is unclear though, whether such increases are simply the result of
better coordination and enforcement, instituted in the last few years with the assistance of the UNDCP,
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or increased drug abuse.
III Country Actions Against Drugs in 1997
Policy Initiatives. Bangladesh is a party to the 1988 UN Drug Convention. In order to bring its laws
into compliance with that Convention, it passed the Narcotics Control Act of 1990. Since then, it has
been working with UNDCP to carry out a five-year master plan for drug abuse control in Bangladesh.
The first year of the five year plan was 1994. The plan is supported by a $2.2 million grant from
UNDCP. UNDCP will initiate another round of meetings with the BDG in spring 1998 to chart future
efforts. Consistent with the five-year plan, legislation was drafted in 1997 to provide greater
enforcement authority, especially against money laundering. Among the items covered in the new
legislation were authority to freeze accounts, seize assets, allow extradition, and permit greater
international cooperation. Although at present money laundering is not a significant problem, special
legislation was also drafted to address that issue. The legislation is to be presented in a future
parliamentary session.
Law Enforcement. Law enforcement efforts have been hampered by poor interagency cooperation and
limited resources. While resource limitations remain, the BDG has been taking steps to promote greater
cooperation within agencies and services. A ministerial level Narcotics Control Board (NCB) with the
Home Minister as Chairman has been created to enhance information exchange and to coordinate law
enforcement work. Similar committees exist at the divisional and district level. DNC officials claim
greater cooperation has been a factor in increasing seizures of narcotics in 1997. According to DNC
figures, by October 1997 seizures of heroin totaled 7.2 kg as opposed to 1.76 kg for all of 1996. Opium
seizures up to October 1997 were 1.24 kg, compared with 0.6 kg in 1996. Judicial inefficiency has also
discouraged prosecutions and created a backlog of pending cases. Relative stability of the political
situation in the last year has permitted courts to reduce some of the backlog.
Corruption. Corruption's impact on narcotics trafficking appears to be limited to border areas. There
are numerous anecdotal accounts of local officials and police assisting narcotics smuggling. However,
this corruption is related more to trade of lowgrade narcotics such as "brown sugar" heroin and
phensidyl cough syrup.
In addition to its adherence to all of the important multilateral agreements relating to narcotic drugs,
Bangladesh also has a bilateral agreement for exchange of information regarding narcotics with Burma,
and a memorandum of understanding on cooperation with Iran. Each of these agreements provides a
sounder basis for better enforcement of Bangladesh's narcotics laws.
Demand Reduction. In the area of demand reduction, the DNC has sponsored programs for raising
public awareness. Efforts have included pamphlet campaigns, workshops, television and radio
advertisement. Most funding for such programs comes from UNDCP. Facing the end of the present fiveyear plan, UNDCP is pushing for a greater focus on demand reduction and will be meeting with the
Home Ministry in spring 1998 to discuss future plans. Limited resources are currently available for
rehabilitation of addicts. Addicts generally have multiple addictions, and when prices for relatively more
expensive drugs such as heroin rise, they switch to cheaper and readily available narcotics such as
phensidyl and buprenorphin, an injectable opiate.
IV US Policy Initiatives and Programs
The United States Government seeks to assist the BDG to interdict narcotics and raise the awareness of
its people to the dangers from drug abuse. In May 1997, a DEA (Drug Enforcement Administration)
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officer visited Bangladesh to investigate trafficking routes and to consult with BDG officials on
enforcement approaches. The US also arranged for a grant of communication equipment to the BDG
through the State Department administered International Narcotics Assistance Program. The DNC
Central Office is using this equipment to maintain contact with its regional offices. The USG also
encourages the BDG to develop greater regional cooperation to interdict the transit of narcotics. The
BDG has been working more closely with SAARC member nations and provides details on narcotics
trafficking to the SAARC Drug Offenses Monitoring Desk in Colombo, Sri Lanka.
INDIA
I. Summary
India is a major producer of licit narcotics and some illicit narcotics, and is a nexus of international
narcotics trafficking for nonUS destinations. It is the world's only producer of licit pharmaceutical
opium gum. Although the Government of India (GOI) continues to tighten controls to curtail diversion
of licit opium to illicit markets, some opium is still diverted. The GOI and the USG worked closely to
design a survey of Indian licit opium cultivation to estimate better the amount of opium gum produced.
Located between the two main sources of illicit opium, Southeast Asia and Southwest Asia, India is also
a growing transit point for Europeanbound heroin. Most illicit Indian opium is for local consumption or
for export to Nepal and Bangladesh. There is little evidence that significant quantities of heroin
produced in or transiting India reach the United States.
In cooperation with the Drug Enforcement Agency (DEA), India moved to improve its controls of the
production and export of narcotics chemical precursors produced by India's large chemical industry,
primarily by restricting access to acetic anhydride (AA), a chemical used to process opium into heroin.
However, some unauthorized exports of essential chemicals, such as ephedrine, and of methaqualone
(mandrax), a popular drug in Africa, continue.
Lack of funding and weaknesses in the intelligence and judicial infrastructure limit successful narcoticsrelated prosecutions. India had formal counternarcotics talks with Pakistan and Burma in 1997. India is
committed to continue the talks and to develop practical results, which have been limited to date. India
is a party to the 1988 United Nations Convention on Narcotics but has not yet enacted implementing
legislation on money laundering or asset seizures. This implementing legislation is now being
considered by the parliament.
II. Status of Country
India, the world's largest producer of legal pharmaceutical opiates, is the only country that still produces
gum opium rather than concentrate of poppy straw. Open container storage of liquid opium resulting in
evaporation and consequently, inaccurate inventory and declining production sharply limited availability
of pharmaceutical opium from 1994 to 1996. In 1997, sufficient rains, improved police enforcement to
avoid illicit diversion and better crop management techniques produced a record harvest of 1341 mts,
compared to the 1996 harvest of 849 mts. With a new vigorous licit cultivation enforcement policy and
careful adjustment of acreage, the GOI believes it can further enhance administrative control of licit
cultivation while maintaining a good harvest.
Criminal elements produce semirefined heroin from both diverted legal opium and illicit opium, but
there is no reliable data on the extent of this production. Illicit poppies are grown in the Himalayan
foothills of Kashmir and Uttar Pradesh and in Northeast India near the Bangladesh and Burmese
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borders. Illicit production appears relatively minor, primarily destined for incountry use or export to
neighboring countries. There is little indication that such opiates enter the US. Heroin base ("brown
sugar" heroin) is the domestic drug of choice, except in the Northeast state of Manipur, where Burmese
white heroin is the most common and is injected. Needle sharing from the intravenous use of Southeast
Asian heroin has spread the AIDS virus at an alarming rate in Manipur.
India produces acetic anhydride (AA), largely for the tanning industry. In 1993, the GOI imposed
controls on the production, sale, transportation, import, and export of AA, especially near the Pakistani
and Burma borders, which reduced the chemical's availability. However, a significant quantity appears
to be diverted to heroin laboratories throughout southern Asia.
India is also a transit route for illicit heroin, hashish, and morphine base from Afghanistan, Pakistan,
Burma, and Nepal. Nepali cannabis is mainly consumed within India, but the other drugs mostly transit
India for European destinations. Trafficking in Indianproduced methaqualone to Southern and Eastern
Africa declined in 1997 as more methaqualone was produced directly in Africa.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Money laundering legislation was introduced in Parliament in spring 1997 but has
not yet been passed. The bill's provisions, focusing on white collar crime, bank fraud, corruption, and
tax evasion are hotly debated among regulatory agencies and within the Indian business community, and
no consensus in Parliament has yet formed. Because of this controversy and the succession of weak
government coalitions, it is uncertain when the money laundering legislation will emerge from
Parliament, and how strong its provisions will be when it does.
In August 1997 the government introduced amendments to modify the Narcotic Drugs and Psychotropic
Substances Act (NDPS) of 1985 to: (1) streamline search and seizure provisions; (2) codify provisions
for civil forfeiture of drugrelated assets; (3) simplify procedures for controlled delivery enforcement
operations; (4) reform sentencing guidelines to differentiate better between minor and serious crimes to
facilitate increased convictions; (5) clarify bail regulations for serious offenders more likely to disappear
before trial, and (6) close technical loopholes hindering the prosecution and conviction of drug
traffickers. The GOI hopes that this legislation will pass Parliament by spring 1998.
The GOI lengthened the list of substances covered by drug law and strengthened controls on precursor
chemicals in recent years. To align Indian law more closely with recommendations of the UN's
Economic/Social Council (ECOSOC) and the UN Commission on Narcotic Drugs, the GOI brought all
substances included in Schedules III and IV of the 1971 UN Convention on Psychotropic Substances
under Indian import/export controls. In addition, the following new substances have been brought under
controls: etryptamine, methcathinone, zipeprol, aminorex, brotizolam, and mesocarb. Regulations
covering the precursor chemicals nacetylanthranillic acid and AA were amended to require sellers to
establish the identity of buyers before sales can be completed.
Accomplishments. The Central Bureau of Narcotics (CBN) and the Narcotics Control Bureau (NCB)
are responsible, respectively, for coordinating licit and illicit drug control policies. To decrease diversion
of licit opium, the GOI, for the sixth consecutive year, raised the 1997/98 minimum qualifying yield
(MQY) per hectare of opium that licit farmers must deliver to the government in order to retain their
licenses. Most farmers will be required to provide at least 52 kg/ha in this crop year, compared with 48
kg/ha in 1996. However, yields of 60 kg/hectare have been reported in the licit growing areas in past
years.
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The GOI credits much of the sharp rise in the licit opium harvest to increased vigilance over licit
cultivators by the CBN, to ensure that all harvested opium was turned in to government warehouses.
Enforcement personnel now regularly visit farmers' homes instead of relying on harvested opium to be
turned in voluntarily. In 1997, these efforts led to the direct seizure of 11 MT of raw opium harvested by
licit cultivators, but not declared to the government.
In November 1997, 30,000 cultivators went "on strike," voluntarily relinquishing their licenses to
demand that the MQY be reduced for the 199798 season and the area under cultivation be raised. In
response, the GOI replaced the cultivators by issuing 26,000 new licenses in three days. Because of the
government's quick response, this change is unlikely to affect the 1998 harvest.
Offenses relating to cultivation and embezzlement of opium by licensed cultivators were put on par with
the other trafficking offenses. Convictions can result in ten to twenty years imprisonment and fines of up
to $6,000.
Strong industry cooperation helped control precursor chemical availability, as does a voluntary industry
code of conduct that aids enforcement efforts. NCB says that seizures of illegal precursor chemicals
shipments declined in 1997. NCB concludes this is due to the reduced availability of illegal supplies.
The three NCB zonal offices opened in 1996 along the Pakistani border are now fully staffed and
operational.
India seized more than 400 kg of heroin on the IndoPakistan border, often alongside seizures of arms,
ammunition, and explosives. Police also targeted heroin transshipment operations run through Afghan
refugee groups in New Delhi.
Using a series of controlled delivery operations, police intercepted more than 100 parcels containing
more than one ton of hashish from Nepal being shipped to foreign destinations through the Indian post
office and the New Delhi international airport cargo terminal. The operations led to arrests of more than
a score of suspects in cooperating countries outside India.
The protocol rank of the NCB Director General was raised to the Special Secretary level, increasing the
stature of the agency within the government.
Despite these accomplishments, much remains to be done to increase the professionalism of the NCB.
Although they have made strong efforts, CBN and NCB officials lack the necessary budgetary support
for a fully successful counternarcotics program. Under the auspices of the UN and with USG
encouragement, Indian and Pakistani counternarcotics officials met in September 1997, and agreed to
speed up the exchange of information and contacts and to consider joint counternarcotics operations.
Periodic meetings also take place with Burmese officials. The greatest significance of these meetings is
to pave the way for more substantive future joint efforts. India maintains close ties with other South
Asian countries through the South Asian Association for Regional Cooperation (SAARC) drug offenses
monitoring desk in Colombo.
Law Enforcement Efforts. Through November 1997, GOI authorities seized 963 kg of heroin in 2,367
cases compared with 1090 kg in 2485 cases in all of 1996. There was a significant rise in bulk seizures
of heroin from Southwest Asia on the Indo-Pakistani border. Southwest Asian heroin was available in
adjoining states and even large cities like Delhi and Bombay. Traffickers now carry more heroin than
hashish, quantities have increased and often police seized large amounts of arms, ammunition, and
explosives along with drugs.
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Indian law enforcement agencies made 11,055 narcotics arrests through November 1997, compared with
10,739 narcotics arrests during all of 1996. Through November 1997, 56 foreigners were arrested,
compared with 136 foreigners for all of 1996. Through November 1997, 8,002 persons were prosecuted,
and 81 persons (usually notorious narcotics criminals) were detained without trial under special
provisions of Indian law, compared with 67 persons so detained during 1996. Through November 1997,
2,216 kg of hashish were seized in 1574 cases, compared with 5,818 kg in 1,951 cases for all of 1996.
Many foreign nationals were arrested at the Delhi international airport attempting to smuggle hashish to
European destinations.
Precursor chemical seizures continued their decline, apparently because of unavailability of illicit
supplies. Through November 1997, 1,881 liters of AA were seized in nine separate cases. Under the
1993 law, AA is considered a "controlled substance," and its production, sale, transportation, import,
and export are regulated. Close Indian cooperation with DEA resulted in significant detections and
seizures. The DEA trained Indian enforcement officials in both enforcement techniques and chemical
analysis.
Methaqualone is frequently smuggled from India, usually through Bombay, to Africa, especially to
South Africa. Methaqualone seizures dropped sharply in 1996 but rose again in 1997. Indian authorities
believe that there are still significant illegal methaqualone exports to Africa, but the trend may be
declining as more methaqualone is manufactured directly in Africa.
The GOI accords enforcement authority coordination a high priority. A senior interagency group meets
quarterly, chaired by the Director General of the NCB. During 1997, the GOI made considerable efforts
to educate state and local law enforcement personnel about narcotics. While NCB's staff is small in view
of the country's size and level of trafficking, several other enforcement agencies contribute to the
counternarcotics effort in India. These include the Central Bureau of Investigation (the federal police
force), the Directorate of Revenue Intelligence (tax and customs revenue investigators), the Border
Security Force (BSF), the Customs and Central Excise Service, state excise tax authorities, and state
police agencies. State agencies make about 90 percent of all drug seizures in India.
Corruption. The Indian government does not, as a matter of government policy or practice, encourage
or facilitate the illicit production or distribution of narcotic or psychotropic drugs or other controlled
substances or the laundering of proceeds from illegal drug transactions. However, the media allege
police, government and political corruption in a wide range of governmental activities, but successful
prosecutions are rare. Criminal courts release some drug defendants without explanation or on weak
legal grounds. The USG receives reports of narcoticsrelated corruption, but cannot independently verify
its extent. The CBN took a number of steps to curb corruption, including transferring officers regularly,
not allowing officers to verify the areas under cultivation in their home districts, making the most
productive farmers in the village responsible for checking the production of all farmers in the village
(with violations resulting in the loss of license for both the offending farmer and the supervisor), and
cross checking assays and weights of opium delivered to government processing facilities.
Agreements and Treaties. India is a party to the 1961 UN Single Convention on Narcotic Drugs, its
1972 Protocol, the 1971 UN Convention on Psychotropic Substances and the 1988 UN Convention.
Most of the provisions in these conventions were implemented in India through the Narcotic Drug and
Psychotropic Substances Act (NDPS) of 1985, as amended in 1989. India is a party to the World
Customs Organization's International Convention on mutual administrative assistance for the prevention,
investigation and repression of Customs offenses "Nairobi Convention" Annex X on assistance in
narcotics cases. India is a member of the regional convention of the member countries of SAARC on
narcotic drugs and psychotropic substances, signed in 1990 to promote the sharing of information
among member countries. India also has bilateral agreements on drug trafficking with Pakistan,
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Mauritius, Afghanistan, and Burma.
Other Bilateral Programs. Narcotics assistance in India by Dublin Group members in 1996/1997 was
about $500,000. Almost all funding was targeted for demand reduction projects and law enforcement
equipment. In 1997, the UNDCP continued implementation of a demand reduction and addict
rehabilitation project funded by a $4 million contribution from the European Union and $3.2 million
from the GOI in rupees. Japan funds a second $100,000 demand reduction project, while another
$500,000 UNDCP project aims to control the availability of precursor chemicals in South Asia.
Cultivation and Production. India is the world's largest source of opium for licit pharmaceutical use,
producing 833 MT in 1995, 849 MT in 1996, and 1341 MT in 1997 (at ten percent moisture). The GOI
did not keep accurate physical inventories for at least 20 years, resulting in large discrepancies
discovered in 1994. To increase future accuracy, the traditional method of storing liquid opium in large
open vats, resulting in undetermined losses due to evaporation, was changed to a system of sealed cans,
and the GOI pledged new vigilance.
Indian opium is cultivated and harvested under strict licensing and control. The government tries to
extract every gram from the farmers. Licit poppy cultivation decreased substantially, from 66,000
hectares in 1978 to 29,777 hectares for the 199697 crop year. Because of this reduction and a severe
drought, India was unable to meet its domestic and export requirements for several years. Last year's
increased production finally gives India a licit stockpile consistent with market demands.
Indian authorities estimate diversion at 10 to 30 per cent of the licit crop, but there are no statistics
available to substantiate this estimate. Potentially large profits (illicit prices per kilo are perhaps 2025
times the official price) mean that such opium would find a ready market. In 1997, nearly 12 MT of
illegal opium from the licit crop were seized, suggesting the amount of opium entering the illegal Indian
drug trade is substantial.
USG offers to help the GOI with a survey of its licit opium fields have not yet been acted upon. A welldesigned crop study could provide accurate data on crop yields and would be an important step in
establishing reasonable levels for the MQY, and thus in obtaining reliable measures of diversion. The
USG hopes to work with the GOI on a future joint opium crop yield survey. USDA and GOI scientists
have collaborated on the design of a poppy survey.
India also produces illicit opium, which is usually converted into morphine or heroin base. Illicit opium
poppy cultivation fell to 2,050 hectares in 1997, almost 35 per cent lower than last year's cultivation,
according to US satellite imagery. Potential opium production based on a yield factor of 15 kg of opium
per hectare that is common in neighboring Pakistan and Burma accordingly fell to 30 MT from 47 mts.
The most extensive cultivation this year was in the remote mountainous region of Dhera Dun, centered
in the northwestern part of the state of Uttar Pradesh. Other major areas of illicit cultivation occurred in
the states of Jammu and Kashmir and Himachal Pradesh.
The GOI locates and destroys illicit cultivation with vigor but in some areas, such as Jammu and
Kashmir, GOI control is challenged by insurgencies. The USG supplies satellite data along with
coordinates of suspected areas of illicit poppy cultivation, and the GOI has carried out extensive field
surveys and some random aerial surveys, some with the assistance of DEA.
Drug Flow and Transit. India is a transshipment point for heroin from Southwest Asia (Afghanistan
and Pakistan), and from Southeast Asia (Burma, Laos, and Thailand). In 1997, there were continued
high seizures by the border security forces of Pakistaniorigin heroin. Most seizures of heroin at the New
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Delhi international airport are from flights bound for Europe. The GOI notifies the DEA of any
significant export shipment of ephedrine or pseudoephedrine and has agreed not to allow any shipment
unless the DEA issues a nonobjection letter.
Demand Reduction. There are no accurate data on the extent of opium and heroin addiction. The GOI
estimates there are from one to five million opium users, and about one million heroin addicts
throughout India, but some nongovernmental organizations (NGOS) estimate the number of addicts is
much higher. The Ministries of Health and Welfare, UNDCP, NGOs and police groups support
treatment and rehabilitation centers and conduct demand reduction and public awareness programs
under grants from the GOI. They lack both funding and staff, despite a GOI budget increase for drug
abuse prevention and rehabilitation programs. The budget increased from about US$ 1.5 million in 1991
to US$ 4.9 million in 1997.
The GOI's comprehensive program for the Northeastern states includes addiction treatment centers,
training courses, and an awareness program. In 1997, the National Institute on Drug Abuse (part of the
US National Institutes of Health) sponsored several drug abuse seminars, training, and travel to US
demand reduction conferences. The Institute also supported two large workshops in India.
IV US Policy Initiatives and Programs
Policy Initiatives. In 1997, the USG worked with the GOI to focus more highlevel attention on and
allocate more resources to narcotics control programs, and urged the GOI to update its domestic laws to
comply with the obligations of the 1988 UN Convention, particularly those related to asset forfeiture
and money laundering of drug trafficking assets.
Bilateral Cooperation. The USG funds training for enforcement personnel, including the Indian Coast
Guard. Relations between the DEA and NCB are good, emphasizing exchange of narcotics enforcement
and intelligence information.
The Road Ahead. In the coming years, the United States will work with the GOI to encourage further
intensification of its efforts to detect diversion from the licit opium crop; combat illicit cultivation and
trafficking; improve its extradition practices; identify, prosecute and convict corrupt officials; and pass
enabling legislation in support of the 1988 UN Convention.
IRAN
I. Summary
The Islamic Republic of Iran is a major transit route for opiates smuggled from Afghanistan and
Pakistan to the West. Iran's role as a narcotics producer appears to have dwindled, but Iran has a
widespread drug addiction problem that now attracts significant Government of Iran (GOI) attention and
resources.
Iran's drug interdiction programs are energetic, even if only partially successful at stemming the flow of
illicit drugs. Regional cooperation efforts by Iran are limited in scope and number, but have been
mentioned favorably by the Dublin Group and the UNDCP, and may signal a new willingness to
cooperate on counternarcotics matters.
Iran has ratified the 1988 UN Convention, but observers remain unaware of enacted laws or regulations
bringing Iran into conformity with the Convention.
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II. Status of Country
Land routes across Iran constitute the single largest conduit for Southwest Asian opiates en route to the
West. Entering from Afghanistan and Pakistan into Sistan/Baluchistan and Khorasan, opium and
morphine are smuggled overland, usually to Turkey but also increasingly to Turkmenistan, Armenia and
Azerbaijan and occasionally by sea across the Persian Gulf.
There are no recent reports indicating that opium poppies are cultivated in Iran to a significant extent.
Although the United States Government estimated in 1993 that 3,500 hectares of poppies remained
under cultivation, more recent reports by the Dublin Group nations present in Iran lend credence to
Iranian claims that poppy cultivation has been largely stamped out. It appears that Iran has reduced
opium production to a level that requires imported opiates to satisfy domestic drug consumption, but a
new survey would be required to confirm a significant reduction in Iranian opium cultivation.
Drug addiction in Iran is a growing problem. In 1996, Iran stated that the number of addicts was
500,000. Nonofficial estimates run as high as 2,000,000, but these statistics often fail to distinguish
between "users" and "addicts." Observers ascribe the GOI's more aggressive antidrug policies, at least in
part, to concern over the burgeoning drug addiction and related crime problems in major Iranian urban
centers.
III. Country Actions Against Drugs in 1997
Policy Initiatives. President Khatemi's September, 1997 statement to the Interpol CounterDrug
Conference in Isfahan indicated that Iran was prepared to take a more active role in regional counternarcotics cooperation. Iran seems to better recognize the magnitude of its domestic drug abuse problem
and appears to be giving counternarcotics efforts more resources and higherlevel attention.
Law Enforcement Efforts. The AntiNarcotics Headquarters coordinates the drugrelated activities of the
Law Enforcement Forces (police), the Islamic Revolutionary Guard Corps, and the Ministries of
Intelligence and Security, Health, Islamic Guidance and Education.
Iran pursues an aggressive border drug interdiction effort. Iran has reportedly invested over
$250,000,000 in physical barriers on the roads and mountain passes of its Eastern frontier, particularly
on the border with Pakistan. Interdiction efforts by the Law Enforcement Forces and the Revolutionary
Guard resulted in numerous drug seizures, stated by Iran to be over 190 tons. This aggressive counternarcotics stance has led to clashes with heavilyarmed smugglers, with over 1,000 casualties reported by
Iran as of 1997. Pakistani inability, and Afghan Taliban unwillingness, to fully cooperate on border
control measures, however, have rendered Iran's interdiction efforts only partially effective, and large
shipments of opiates continue to transit Iran.
Punishment for narcotics offenses is severe, with death mandated for possession of more than 30 grams
of heroin or 5 kilograms of opium. Iran has executed over 10,000 narcotics traffickers in the last decade.
Dublin Group reports indicate that about 80,000 are imprisoned for narcotics offenses, accounting for
57.8 percent of Iran's prison population.
Corruption. While there are no dispositive reports concerning highlevel complicity with narcotics
traffickers, there are periodic reports of corruption among lowerlevel law enforcers, which is consistent
with the transit of multipleton opiates shipments across Iran. Recent efforts by Iran to eliminate
corruption include the arrest and conviction of a former antinarcotics judge of the Revolutionary Court
and the deputy commander of a Law Enforcement Forces post.
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Agreements and Treaties. Iran is a party to the 1988 UN Drug Convention but does not appear to have
enacted legislation bringing it into conformance with the Convention. Reports indicate that the drug
laws recently approved by the Iranian Expediency Council may help to bridge the gap between current
law and the Convention. Iran is also a party to the 1961 UN Single Convention. Iran has signed counternarcotics agreements with many nations. Iran has shown an increasing desire to cooperate with the
international community on counternarcotics matters, hosting a September, 1997 INTERPOL
conference and joining with UNDCP and Pakistan on a project to bolster drug interdiction efforts on the
IranPakistan border.
Cultivation and Production. The last United States Government official survey of Iranian poppy
cultivation, in 1993, estimated that 3,500 hectares were under cultivation, producing between 35 and 70
metric tons of opium. This year, reports from observers on the scene, including Dublin Group members
with an official presence in Iran, give credence to Iranian claims that the opium crop has been largely
eradicated. We are unable to confirm these reports currently but will be making efforts to conduct a new
survey during the coming year.
Drug Flow and Transit. Multiton shipments of opiates enter Iran overland from Pakistan and
Afghanistan in truck caravans, often organized and protected by heavilyarmed ethnic Baluch from either
side of the frontier. Once inside Iran, such large shipments are either concealed within ordinary
commercial truck cargoes or broken down into smaller subshipments. The Dublin Group reports that
Iranian interdiction efforts have disrupted smuggling convoys sufficiently to cause a change in smuggler
tactics emphasizing concealment.
Most of the opiates smuggled into Iran continue to neighboring countries for further processing and
transportation to the West. Turkey is the main processing and transport intermediate destination for
these opiates, mostly bound for Europe. Established trade and smuggling routes from Iran through
Turkmenistan, Azerbaijan and Armenia provide another route to Russia and Europe that bypasses
Turkish interdiction efforts. A third route, over the Persian Gulf to the nations of the Arabian Peninsula,
persists despite the risk of severe punishment, in order to use the modern transportation and
communication facilities. A significant, but unknown, quantity of the opiates smuggled into Iran remain
there for domestic consumption by the up to 2,000,000 users.
Demand Reduction. In the past, the Islamic Republic had attacked illegal alcohol use with more fervor
than drug abuse, and had been reluctant to discuss drug problems openly. Recently, public awareness
campaigns and attention by two successive Iranian Presidents as well as cabinet ministers have given
demand reduction a significant boost. The Dublin Group reports that Iran and UNDCP have begun
discussions concerning training designed to better assess and analyze the domestic drug abuse problem.
IV. US Policy Initiatives And Programs
In the absence of diplomatic relations with Iran, the United States of America plans no narcotics
initiatives in Iran. The United States Government continues to encourage regional cooperation against
narcotics trafficking.
THE MALDIVES
The Republic of Maldives is an archipelago of 1100 islands in the Indian Ocean with a comparatively
small drug problem. Amidst fears that the Maldives might increasingly become a transshipment point
for drug smugglers, the government of the Maldives, assisted by $25000 in US government funding,
began to computerize its immigration recordkeeping system in 1993. With $20,000 in additional US
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funding in 1996 and 1997, the Maldives further expanded this computer system through the purchase of
additional computers and microwave networking technology.
The US government has also sponsored the participation of Maldivian police officials in
counternarcotics training. Two such officials attended USfunded training in Bangkok in July of 1997.
In November 1997, the Maldivian government established a Narcotics Control Board under the
Executive Office of the President. The board's first commissioner is a Lieutenant Colonel with
concurrent duties as Deputy Commissioner of the Maldivian National Security Service. The Narcotics
Control Board has responsibility for coordinating drug interdiction activities, overseeing the
rehabilitation of addicts, and coordinating with nongovernmental organizations and individuals engaged
in counternarcotics activities. In 1997, the Maldivian government also established the country's first
drug rehabilitation center. The Republic of Maldives has no extradition treaty with the United States. In
1994, however, the Maldives cooperated with the US in rendering a Nigerian national to the United
States to face narcotics trafficking charges. The Government of the Maldives is a signatory to the 1988
UN Convention. The Convention, however, has not yet been ratified by the country's legislature. The
Maldives is a party to the South Asian Association for Regional Cooperation (SAARC) Convention on
Narcotic Drugs, which came into force in the Maldives in 1993. There have been no publicized cases of
narcoticsrelated corruption in the Maldives.
NEPAL
I. Summary
Nepal is not a significant producer or consumer of narcotic drugs, but the number of heroin and overthecounter drug abusers is rising. There is no evidence that it has become an important transit route, despite
its proximity to major heroin source or transit countries. During 1997, the Ministry of Home Affairs and
the Narcotics Drug Control Law Enforcement Unit (NDCLEU) continued to implement a master plan
for drug abuse control, which was developed with the assistance of the United Nations Drug Control
Program (UNDCP). Nepal is a party to the 1988 UN Drug Convention, the 1961 UN Single Convention
and its 1972 Protocol. It is also a party to the 1993 South Asian Association for Regional Cooperation
(SAARC) Convention on Narcotic Drugs and Psychotropic Substances. Nepal does not have adequate
money laundering, criminal conspiracy or asset seizure legislation as called for in the 1988 UN Drug
Convention. Corruption, especially Customs corruption, is problematic in Nepal, but there is no
evidence that highlevel Nepalese officials are involved in narcoticsrelated corruption. Cooperation
between the US Drug Enforcement Agency (DEA) and NDCLEU is excellent and has resulted in
indictments in both countries.
II. Status of Country
Heroin from Southwest Asia (Afghanistan, Pakistan, India) and Southeast Asia (Burma, Laos and
Thailand) is smuggled into Nepal across the open border with India and through Kathmandu's
international airport. While use of semirefined "brown" (no. 3) heroin is rising in Nepal, abuse of locally
grown cannabis and hashish, marketed in freelance operations, is more widespread. According to
NDCLEU, there has also been a recent increase in precursor chemicals trafficking and in the abuse of
licit, codeinebased cough medicines.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The Government of Nepal (GON) developed a package of legislation on money
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laundering, mutual legal assistance and witness protection, in conjunction with assistance from UNDCP
and the Financial Crimes Enforcement Center (FinCEN) that will be submitted to Parliament in 1998.
The GON will also submit amendments to its Customs Act to criminalize trafficking in several precursor
chemicals. In cooperation with UNDCP, the GON is also developing a program to expand NDCLEU
into a narcotics drug control bureau.
Law Enforcement. Figures for the first six months of 1997 indicate that seizures of cannabis, hashish
and opium all declined significantly from the previous year, though seizures of heroin were slightly
higher (see tables below.) Arrests were also lower. Authorities seize most heroin and hashish in
Kathmandu at Tribhuvan International Airport. The GON's law enforcement effort is weakened by a
lack of coordination and cooperation between NDCLEU and Nepal's customs and immigration services.
NDCLEU has now developed an intelligence wing, but is hampered by a lack of transport,
communications and surveillance equipment, and by poor coordination with the National Forensic
Laboratory, which tests narcotic substances.
Cultivation and Production. Authorities believe that all heroin seized in Nepal originates elsewhere.
There appears to be some cultivation of opiates, but detection is complicated by small plantings among
licit crops. Cannabis cultivation is substantial, particularly in the lowland. However, there is no evidence
to suggest that Nepalese cannabis has an impact on the United States.
Drug Flow and Transit. Kathmandu's International Airport lacks Customs security. Eventually, the
GON hopes to address this situation by opening an NDCLEU office at the airport. Currently, narcotics
transiting Nepal move both east and west, in equal proportion. There have been increasing arrests of
Nepalese couriers in third countries with antidrug messages. The USG also funded the development of a
middle school teacher training program to discourage narcotics use.
IV. US Policy Initiatives and Programs
Policy Initiatives. The USG works closely with GON agencies to further progress under the master plan
for drug abuse control. The USG also cooperates with other donor nations through the Kathmandu miniDublin group. In 1997, the USG signed its second narcotics control agreement with the GON, sponsored
a Colombo Plan seminar on the rehabilitation of incarcerated drug abusers, contributed $11,200 in
transport and communications equipment to NDCLEU, sponsored the production and distribution of two
demand reduction audio tapes, developed plans with NDCLEU to fund and create a new miniforensic
lab, helped develop a new teacher training program to discourage drug use, and sponsored an expert visit
to advise on Nepal's proposed moneylaundering legislation.
The Road Ahead. The USG will support the continued development of NDCLEU, cooperate with
UNDCP to expand NDCLEU into a new narcotics drug control bureau, support the Colombo Plan's
rehabilitation programs in Nepal, provide assistance in implementing money laundering legislation as
requested and continue to work with the Ministry of Home Affairs to assist them with demand reduction
programs.
PAKISTAN
I. Summary
Pakistan is a major producer and an important transit country for opiates and cannabis destined for
international markets. In 1997, Pakistan produced approximately 85 metric tons (MT) of opium from
about 4,100 hectares of poppy, an estimated increase of 13.3 percent from last year. The record of law
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enforcement action against major traffickers and the interdiction of significant shipments of heroin and
morphine base improved, but, overall, continued to be poor. Seizures of precursor chemicals, however,
improved substantially. In contrast to the previous elected Bhutto government, the Nawaz Sharif
government (which took office in February 1997) voiced greater highlevel concern about Pakistan's
narcotics problems, although this has not yet manifested itself in essential actions in the law
enforcement and demand reduction areas.
The Government of Pakistan (GOP) passed comprehensive drug control legislation this year, including
provisions criminalizing drugrelated money laundering and sanctioning mutual legal assistance.
Morphine base and heroin laboratories were driven out of Pakistan, relocating across the border in
Afghanistan. In 1997, the GOP arrested one person subsequent to a USG request for extradition. A total
of 23 narcoticsrelated extradition cases, some more than six years old, are pending. No extraditions
occurred during the year. The prospects for bilateral cooperation on narcotics law enforcement were
clouded by the arrest in April and subsequent conviction of a longtime Pakistani employee of the Drug
Enforcement Agency (DEA). The GOP charged the employee with entrapment of a Pakistan Air Force
Officer who was involved in a heroin smuggling operation. The employee's conviction is currently under
appeal. Pakistan is a party to the 1988 UN Drug Convention.
II. Status of Country
Pakistan remains a significant source and transit country for opiates and cannabis to many parts of the
world. According to USG data, between 1996 and 1997, opium production increased from 75 MT to 85
MT, an increase of 13.34 percent. Opium poppy cultivation increased by 20.59 percent in 1997. Sharply
increased opium prices and unusually favorable climatic conditions for poppy cultivation this fall could
mean a dramatic increase in poppy cultivation in 1998, unless the GOP mounts an extremely effective
enforcement effort. The volume of opium and heroin produced in Afghanistan and trafficked to Western
Europe and North America via Pakistan continued to be high. Although morphine base and heroin
laboratories were pushed just across the Afghanistan border this year, preventing their return will require
GOP vigilance.
Acetic anhydride (AA), which is used to refine heroin, continues to transit Pakistan enroute to
Afghanistan. There is one AA factory in Pakistan. It produces only one quarter of the total legitimate
requirement. Controls are adequate. Pakistan is not a party to any additional agreements that relate to
chemicals apart from the 1988 UN Drug Convention. The GOP provides monthly seizure statistics for
chemicals and other illegal substances to the Embassy. The Control of Narcotic Substances Act provides
language equates illegal chemicals with illegal narcotics for the purposes of arrest, seizure and
prosecution.
Pakistan's large and growing addict population now consumes an estimated 92 MT of heroin a year,
making Pakistan a net opium importer. Although Pakistan was cited as a country of primary concern
with regard to money laundering, it is not an international financial center. While it is believed that
money laundering occurs as a result of illicit narcotics activity in Pakistan, little information is available
with which to assess the nature and magnitude of this problem.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Prime Minister Nawaz Sharif's government announced a number of important policy
and legislative initiatives after assuming office in February 1997; although these initiatives were
welcome and necessary, they generally have not yet been translated into action in the law enforcement
and demand reduction areas. One of the PM's first acts was to order law enforcement agencies to stop
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the flow of illicit drugs via Pakistan's international airports. The GOP increased vigilance and plans to
purchase modern drug detection equipment. The PM also requested that two important drugrelated
ordinances be converted into law. As a result, the AntiNarcotics Force (ANF) Act and the Control of
Narcotic Substances (CNS) Act were passed.
The first will help institutionalize the ANF as the lead agency for drug control. The second is a
comprehensive law criminalizing narcoticsrelated activities in keeping with requirements of the 1988
UN Drug Convention. Despite major economic problems which required public sector budget and
personnel cuts, the GOP approved a 68 percent increase in the ANF's budget, and the ANF was granted
a waiver of the government hiring freeze to permit it to fill vacancies. The GOP required that the ANF
be given a daytoday, operational role in Pakistan's international airports. It also called for extension of
ANF operations and application of the CNS Act to Pakistan's Federally Administered Tribal Areas
(FATA) and Provincially Administered Tribal Areas.
The Pakistani cabinet requested that special narcotics courts be established expeditiously in keeping
with authority contained in the newlypassed CNS Act, which we hope will improve Pakistan's ability to
prosecute offenses in this area, consistent with fundamental fairness. The Act provides for two classes of
special courts to try offenses carrying varying levels of imprisonment. The ANF proposed the
establishment of ten special courts which would be empowered to try all offenses as well as 32 special
courts at the divisional level to try offenses punishable with imprisonment for two years or less. ANF
then requested the Law and Justice Division and the provincial governments to approve the courts and
open discussions with the Finance Division for the funding to establish them.
The Narcotics Control Division (NCD) produced the 1995 Drug Abuse Control Master Plan for
Pakistan, a strategy to eradicate completely opium cultivation and production and to make Pakistan
drugfree by the year 2000. The GOP's Planning Division gave the plan conceptual clearance, with some
modifications. The United Nations Drug Control Program (UNDCP) and ANF are working on the
modifications, which may reduce the plan's cost from $75.5 million to $64.1 million. When these
changes are incorporated, the plan will be submitted for cabinet approval. In the interim, the GOP
already subscribes to the goal of eliminating commercial opium poppy cultivation in the year 2000.
Accomplishments. In 1997, Pakistan's opium production rose by 10 MT despite broadened crop
eradication bans and assistance from the USG and other donors. GOP enforcement and tribal pressure
directed against morphine base and heroin processing laboratories operating in North West Frontier
Province (NWFP) drove these laboratories out of Pakistan and across the border into Afghanistan. GOP
opiate seizures improved slightly in 1997 while seizures of AA increased substantially. The 1997 CNS
Act contains provisions making drugrelated money laundering illegal and providing for mutual legal
assistance and forfeiture of assets acquired through illicit drug activity. These provisions have not yet
been effectively implemented, however.
Based on available information, Pakistan failed to arrest or convict a single major drug trafficker during
1997. Of the 23 persons whose narcoticsrelated extradition the USG requested, one was arrested and
none were extradited in 1997. Narcotics enforcement cooperation between Pakistan and the USG was
severely strained by the case of a Pakistani DEA employee arrested in April and charged with and
convicted of entrapping a Pakistani Air Force officer involved in an operation to smuggle heroin to the
US. The DEA employee had played a key role in assisting DEA to identify the drug smuggler. As of
December, the case was being appealed. Pakistan appeared to make no headway in 1997 in demand
reduction programs designed to fight its growing drug addiction problem.
Law Enforcement Efforts. Despite a highlevel policy commitment to improve narcotics law
enforcement and despite the GOP's recognition that rising Pakistani drug addiction is a serious problem,
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the overall record of narcotics law enforcement fell substantially below last year's relatively poor
performance, except for some increases in opiate seizures and sharply increased AA seizures. In the first
11 months of 1997, Pakistani law enforcement agencies seized 8.1 MT of opium, 4.2 MT of heroin, and
100 MT of cannabis. Opium seizures increased by 27 percent and heroin by 18 percent, but cannabis
seizures decreased by 49 percent. For the first 11 months of 1997, there were 41,285 drug arrests,
compared with 48,945 during the same period in 1996. By November 30, 1,938 liters of AA had been
seized, compared with 147 liters during that period in 1996. The largest seizures of heroin and opium
were made by the Baluchistan Frontier Corps and the police, followed by ANF. Of the 910 kg of heroin
seized by ANF, two very large seizures, accounting for 75 percent of ANF's total heroin seizures, were
the direct result of DEAinitiated investigations. ANF's assistance leading to the largest seizure was
minimal and ANF has refused to share with DEA any of the information developed as a result of the
seizure and their subsequent investigation, despite repeated DEA requests. It is believed that the GOP
froze some assets related to drug trafficking in 1997, but the amount has not been confirmed. The GOP
has frozen millions of dollars worth of drugrelated assets since 1993, but none has yet been forfeited.
The GOP did not launch any major interdiction operations against large shipments of opiates entering
Pakistan from Afghanistan. The performance by the Frontier Corps in Baluchistan was highly
commendable, as their seizure statistics are up significantly over last year's, in some instances, by as
much as three times. The political authorities, NWFP, also recorded large increases in heroin and opium
seizures.
UNDCP hired a retired British police officer to conduct an independent evaluation in September 1997 of
its Pakistan/Iran border project that supports joint efforts by Iran and Pakistan to reduce crossborder
drug trafficking. The overall evaluation was positive, but some goals have not yet been met. The project
was extended six months to allow for additional time to accomplish them.
There were several raids against heroin laboratories located in NWFP. Seven operational laboratories,
six in Khyber and one in Karachi, were destroyed. Nine laboratory employees were arrested, but none of
them was an owner of the labs. The Provincial Government of the NWFP states that no laboratories
currently operate there. The removal of labs from NWFP is the direct result of the Governor's
commitment and efforts he undertook with the Frontier Corps and tribal leaders in Khyber Agency.
Because lab operations have relocated just across the border in Afghanistan (Nangarhar Province), the
danger exists that, unless the GOP remains alert, labs will resume operation in NWFP.
There were no known arrests of major drug traffickers in 1997, nor was any major drug violator
convicted. The cases of two important drug traffickers are illustrative of major problems confronting
Pakistan's judiciary. Sakhi Dost Jan Notezai's case has been in process since 1993. When Notezai's case
was completed in the lower court and the judge was ready to announce his verdict, Notezai's attorney
obtained a stay order on the verdict from the Supreme Court on a plea of retrial (de novo). The retrial
issue has been pending in the Supreme Court for the last two years. In the meantime, the High Court
granted bail to Notezai, but later canceled it. Notezai appealed to the Supreme Court, which granted the
bail, but which also directed that a decision be made on the retrial issue quickly. No date for hearing the
de novo issue has been scheduled.
Another highprofile case is still pending against exmember of the National Assembly Munawar Hussain
Manj, arrested on drug charges on April 14, 1995. Manj was granted bail on medical grounds in April
1996. After his release, he was appointed a member of the Narcotics Subcommittee of the National
Assembly. He campaigned for a seat on the National Assembly in 1997, but lost. ANF applied to cancel
Manj's bail and on May 22, 1997, the High Court of Punjab complied. This court directed the trial court
to finalize the case in six weeks. Since then, delays have been constant. The trial was first postponed due
to the transfer of the trial court judge. When a new judge was assigned, he was not able to hear the case
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because the government had not issued notification as required declaring him a narcotics judge. The trial
is now back on track in the Special Sessions Court and should be completed soon.
The ANF's performance was undermined by inadequately trained and motivated personnel, the breadth
of its mandate and possibly by insufficient funding. The ANF failed to focus its resources on the
destruction of major morphine base or heroin trafficking organizations. It lacks the capacity to acquire
and analyze information on such organizations and to develop thorough investigations against major
drug figures. Unless the ANF can develop strong cases against influential drug traffickers, successful
prosecutions will not be forthcoming.
To implement their expansion plans, the ANF took in 345 personnel from the Army. During 1996, the
ANF staff numbered less than 1,000 although it rose to 1,363 in 1997. Implementation of a major
recruitment drive should be completed by 1998, bringing ANF total staffing to 1,940. Typically, Army
personnel, who come to ANF without counternarcotics training, are detailed to highly responsible
positions within the ANF on threeyear assignments. The ANF Director General's efforts to remove
civilian employees whose performance was deemed substandard failed. Instead, ANF was instructed by
the GOP's Establishment Division to take disciplinary action against nonperformers and those known for
corruption. The final outcome of this effort is not yet clear.
The Pakistani Army also supports the ANF on an "as needed" basis by meeting extraordinary
transportation and communication requests. Although GOP funding for the ANF increased by 68
percent in 1997, this amounted to only 41 percent of the ANF budget request. The funding shortfall may
have had an impact on ANF's ability to sustain operational expenses and to carry out major operations.
However, considerable financial resources are believed to be consumed by administrative support
expenditures that seem to contribute little to the organization's operational effectiveness. INL assistance
to the ANF and other Pakistani enforcement agencies was temporarily halted on July 1, 1997, pending
an assessment of the level of future bilateral narcotics enforcement cooperation following final
resolution of the case of the DEA employee arrested in April.
Corruption. To our knowledge, neither the GOP as a matter of policy nor any senior official of the
government encourages or facilitates the illicit production or distribution of narcotic or psychotropic
drugs or other controlled substances, or the laundering of proceeds from illegal drug transactions.
Sufficient legislation exists to control and punish public corruption, but these laws are seldom enforced.
Given the extremely low salaries paid to law enforcement and judicial personnel, corruption is a
constant threat to the integrity of these institutions.
Treaties and Agreements. Pakistan is a party to the 1961 UN Single Convention, the 1971 UN
Convention on Psychotropic Substances and the 1988 UN Drug Convention. Pakistan is also a party to
the South Asian Association for Regional Cooperation (SAARC) Convention on Narcotics. Extradition
between the United States and Pakistan is conducted under a treaty signed between the USG and the UK
in 1931, made applicable to India in 1942. Pakistan and the US have continued the applicability of the
UK treaty. The USG and Pakistan are exploring the possibility of updating the extradition treaty.
Pakistan has bilateral agreements on drug cooperation and control of drug trafficking and abuse with the
United States, the United Arab Emirates, Kyrgyzstan, Uzbekistan, China and India. A memorandum of
understanding on counternarcotics cooperation with Nigeria has been pending since last year. Pakistani
and Indian narcotics officials continued to discuss drug trafficking and chemical control, but there have
been no concrete enforcement operations requiring joint cooperation to date.
Cultivation and Production. According to USG estimates, during the 1997 poppy growing season
(September May), 4,100 hectares of poppy were cultivated in the NWFP, producing 85 MT of opium.
Between 1992 and 1997, there was a decline of 51.4 percent in estimated opium poppy cultivation.
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However, this downward trend in opium poppy cultivation appears to have been reversed; USG data
shows that poppy cultivation increased by 13 percent in 1997, with opium production rising from 75 MT
in 1996 to 85 mts. Currently, Pakistan's addict population consumes an estimated 92 MT of heroin,
making Pakistan a net importer of heroin.
Opium poppy is grown only in Pakistan's North West Frontier Province, which borders Afghanistan.
The greatest concentrations of poppy cultivation occur in Dir District and in the agencies of Bajaur and
Mohmand. All three areas enjoy considerable tribal autonomy from central government authority. The
governor of NWFP and other provincial officials support the GOP's goal of eliminating poppy
production in the year 2000. To achieve that goal, however, there must be great effort and commitment
in the two remaining years.
Unfortunately, local officials responsible for implementing GOP policy in Dir and Mohmand failed to
negotiate voluntary poppy reduction effectively with tribal leaders and/or subsequently failed to enforce
a poppy ban in all areas designated as poppy free. As a result, USG figures show that cultivation in
Mohmand climbed from 900 hectares in 1996 to 1,050 in 1997 and in Dir, cultivation increased from
1,600 hectares to 2,200 hectares. No increase in cultivation was reported in Bajaur, where the local
political authority demonstrated a strong commitment to poppy reduction. In late 1997, the GOP and the
USG worked out the final details of an agreement to be signed in 1998 which would permit accurate
monitoring of poppy growing in the areas where it has been banned, permit timely eradication of that
poppy and hold local officials accountable for ensuring eradication in areas under the poppy ban.
INL funds alternative development/poppy reduction projects in Mohmand and Bajaur agencies. The
assistance finances crop substitution, road construction, electrification and water schemes in poppy
growing areas where GOP access is limited due to lack of physical infrastructure and geographic
isolation. A similar program is implemented in Dir through a UNDCP project to which the USG has
contributed.
The 199798 Poppy Enforcement Plan further expanded the area in NWFP where growing opium poppy
is prohibited. The ban on poppy cultivation now applies to 87 percent of Mohmand agency, 88 percent
of Bajaur agency and 100 percent of Dir district. The GOP and the USG provide resources to local
enforcement officials to initiate involuntary poppy eradication where cultivation is discovered in areas
covered by the ban. From December through March, poppy enforcement measures were taken in
Mohmand and Bajaur Agencies. The Embassy verified destruction of 155.30 acres of poppy in Bajaur
and Mohmand during the 1996/97 crop year.
The 1998 poppy crop has already been sown. The high price paid for opium gum this year and
abnormally abundant rainfall during autumn served as major incentives to plant increased quantities of
poppy. Although some enforcement measures were taken in NWFP, such as the arrest of farmers who
violated the poppy ban, only resolute determination on the part of provincial authorities will prevent
further backsliding from the 51 percent decrease in poppy cultivation recorded between 1992 and 1996.
Drug Flow and Transit: Opiates and cannabis that transit Pakistan are principally destined for Western
European and, to a lesser extent, North American markets. DEA estimates that 80 percent of the heroin
originating in Afghanistan and Pakistan is consumed in Western Europe and 18 percent in North
America. There are three basic smuggling routes. Morphine base and heroin processed in northern
Afghanistan are smuggled into NWFP from where they are normally trafficked through Punjab and
Sindh provinces and exit Pakistan at the Arabian Sea or at the Indian border. Drugs are also smuggled
from southern Afghanistan to Baluchistan's Makran coast and onward to the Arabian Sea or to Iran. In
addition, drugs travel west from south/central Afghanistan through the Quetta area of Baluchistan and
south to the Karachi area of Sindh and on to A) Iran, Turkey, Western Europe and, B) in smaller
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amounts, to North America. Recent reports indicate that some drugs are smuggled from southern
Afghanistan through the NWFP, reenter Afghanistan's Badakshan province (controlled by Northern
Alliance authorities) and then enter bordering Tajikistan.
All of Pakistan's international airports serve as conduits for heroin smuggling. Numerous couriers for
Nigerian trafficking networks continued to be apprehended at airports in 1997. The Karachi seaport also
is an important conduit. This year, there were increased reports of attempts to export heroin by
international mail. The press regularly reports the arrests of Pakistanis in Saudi Arabia or the Gulf States
for narcotics trafficking.
Demand Reduction. Pakistan has a major drug abuse problem. A 1993 UN study indicated that
Pakistan at that time had about 3 million addicts of all kinds, 1.5 million of whom were heroin addicts,
compared to an estimated 600,000 heroin addicts in the United States. With an estimated seven percent
increase in addicts per year, the number of Pakistani drug addicts is thought to be over 3.5 million today.
Most heroin addicts smoke the drug, but follow up studies have identified growing numbers of needle
users in large cities. The GOP plans to conduct a new drug abuse study in 1998, which will cover a
larger segment of the population and include a wider geographic range than the last study. The GOP
plans to conduct such a study every five years. Public efforts against drug addiction are limited to
detoxification, without any follow up treatment. Private clinics use a variety of treatment methods for
addiction, but relapse rates are high for all treatment methods.
The ANF's Drug Abuse Prevention and Resource Center (DAPRC) continues to be active in demand
reduction activities, particularly in the public awareness area. It made agreements with all four Pakistani
provinces to permit provincial demand reduction programs, coordinated by the DAPRC. Pakistan's
religious leaders continue to be educated about drug abuse and are included in demand reduction efforts.
The ANF is planning a series of workshops for general practitioners and family physicians in major
cities such as Karachi, Lahore, Rawalpindi, Islamabad, Peshawar and Quetta. Workshop objectives are:
1) to create an awareness of the Control of Narcotics Substances Act; 2) to educate participants with
regard to which drugs are available to users; and 3) to educate participants to the hazards of
irresponsible prescription of psychotropic drugs. Demand reduction is an integral part of Pakistan's fiveyear master plan for drug control.
UNDCP's demand reduction project activities tapered off significantly when its fiveyearold project
ended in March 1997. Although UNDCP believes that the current GOP demand reduction institutional
setup is weak and that the GOP needs to award demand reduction a higher priority, it anticipates that
these problems will be addressed and is planning a future program of assistance in demand reduction.
IV. US Policy Initiatives and Programs
USG narcotics control policy for Pakistan focuses on five objectives. The first is to reduce significantly
the flow of illegal drugs into Pakistani and international markets. The USG supports the GOP political
determination to combat illegal drug production, trafficking and abuse and urges Pakistan to dedicate
sufficient resources to fight these problems effectively. The USG works with the GOP to strengthen the
ability of the criminal justice sectors to break up major trafficking organizations by enhancing their
ability to investigate, prosecute and convict major narcotics offenders, and we encourage international
organizations involved in counternarcotics to strengthen international cooperation to help combat
Pakistan's illegal drug problems.
Secondly, we encourage extraditions of fugitives wanted for narcotics crimes in the US. The third goal is
to urge the GOP to give priority to operations to arrest, seize assets and prosecute major traffickers,
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ensure that heroin/morphine base laboratories are not reestablished in Pakistan and interdict large
shipments of opiates, particularly along the border with Afghanistan and Iran. Fourth, we encourage the
GOP to extend money laundering legislation to apply to nonbanking institutions and to draft and pass
comprehensive money laundering legislation. Finally, we encourage a more aggressive implementation
of the GOP's poppy cultivation reduction campaign.
Bilateral Cooperation. The USG provided $1.87 million in narcotics control assistance to Pakistan in
1997 under the annual Letter of Agreement (LOA) that amended the original bilateral agreement on
narcotics. Funding under the LOA was sustained at approximately this level for the last two years. It
helps support three fundamental counternarcotics activities in Pakistan-reduction of opium poppy
cultivation, narcotics law enforcement and demand reduction. USG assistance was used to extend the
area encompassed by the ban on poppy cultivation in NWFP by implementing crop substitution and
developmental schemes in Mohmand and Bajaur agencies. Although opium production increased by 13
percent (10 metric tons) in the NWFP this past year, there was a decrease in production in Bajaur and
only a two MT increase in production in Mohmand. The bulk of the increase was in Dir District, which
accounted for 50 percent of the increase. In consultations with the GOP, USG and UNDCP officials
have stressed that failure to decrease poppy cultivation in 1998 in Dir will make it difficult to justify the
continued provision of alternative development assistance.
In 1997, the USG provided a limited amount of equipment, supplies and training to Pakistani law
enforcement agencies engaged in counterdrug operations. The ANF received most support, but law
enforcement funding also assisted Customs, the Coast Guard and the Frontier Corps. Bilateral
cooperation on narcotics law enforcement and Pakistan's record of enforcement activity during 1997
were a serious disappointment. Although seizures of opiates increased, they remained only a small part
of the large amount of narcotics known to be transiting Pakistan. No major traffickers were arrested or
convicted. Dismantling major trafficking organizations and interdiction of large shipments of opiates are
important objectives set forth in the bilateral agreement with Pakistan. The GOP has repeatedly failed to
make progress in achieving these objectives.
The bilateral agreement also encourages cooperation between Pakistani and US narcotics enforcement
agencies. Until the final resolution of the case of the DEA employee in Islamabad arrested in April and
convicted in October on the charge of entrapping a Pakistani Air Force Officer, the future of bilateral
drug enforcement cooperation is uncertain. Because of this lack of GOP cooperation in the case of the
DEA employee and because of the ANF's role in his arrest, detention, and court-martial, INLfunded
assistance to Pakistan's law enforcement agencies was suspended on July 1, 1997. US funds continued to
support demand reduction public awareness programs. Current and reliable figures on numbers of
addicts are unavailable, but it is generally believed that the numbers of persons addicted to opiates
continues to climb.
Other Bilateral Programs. A number of Western countries and multilateral organizations, including
Canada, the UK, Germany, France, Sweden, Japan, the UNDCP and the EU have substantial
counternarcotics programs in Pakistan. The programs are in the law enforcement and demand reduction
areas.
The Road Ahead. In 1998, the USG will continue to work with Pakistan to eliminate poppy cultivation
by the year 2000 and upon the release of the Pakistani DEA employee, will be prepared to consider
resuming financial assistance to narcotics law enforcement agencies in order to strengthen their capacity
to perform effectively. Remaining areas of largescale, poppy cultivation in Bajaur and Mohmand
agencies of NWFP will be targeted for crop substitution/developmental schemes and the cultivation ban
will be enforced in areas which have benefited from assistance. The USG will continue to urge Pakistan
to adopt the fiveyear, drug abuse master plan, as well as promulgate a comprehensive money laundering
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law. In addition, the USG will encourage Pakistan to focus enforcement efforts on dismantling major
trafficking organizations and successfully prosecuting their leaders and on interdicting large
consignments of opiates and precursor chemicals. Finally, the USG will continue to encourage timely
cooperation on processing requests for extradition of fugitives to the US to face narcotics charges.
Click here for Pakistan table
SRI LANKA
I. Summary
Sri Lanka continued its nationwide demand reduction campaign in 1997, and the country also remained
a strong regional player in counternarcotics cooperation during the year. Implementation of the
counternarcotics master plan, begun in 1994, continued. Cannabis eradication increased, but seizures
decreased, and there was also a decrease in the number of drugrelated arrests due to police
preoccupation with the conflict against the Liberation Tigers of Tamil Eelam (LTTE), a terrorist
organization fighting for a separate state in the northeast of the country. The government of Sri Lanka
was a leader in counternarcotics activities in the South Asian Association for Regional Cooperation
(SAARC). The government continued to make available to other SAARC countries a US governmentfunded database on narcotics arrests and related information. Efforts at public education on drug abuse
also continued during the year. Sri Lanka is a party to the 1988 UN Drug Convention, although enabling
legislation for the Convention had not been presented to Parliament by the end of 1997. In a new
development, the government has begun work to introduce legislation on control of precursor chemicals.
II. Status of Country
Sri Lanka has a comparatively modest drug problem. There has been, however, a slight but steady
increase in narcotics consumption-particularly heroin-in recent years. The Ministry of Defense (MOD)
has overall responsibility for all counternarcotics and demand reduction activities, but the ongoing
conflict with the LTTE drains much of the Ministry's resources, leaving it limited time and funding to
address the drug problem. Sri Lanka's 1,100 miles of coastline cannot be adequately patrolled, especially
since Sri Lanka's naval forces are heavily engaged in the ongoing conflict. Sri Lanka's popularity as a
transshipment point for narcotics from South and Southeast Asia has consequently grown, although we
do not have evidence that these drugs are coming to the US in quantities large enough to have a
significant effect on the US. Police officials in the southern Indian State of Tamil Nadu continued to
report drug smuggling activities among Sri Lankan Tamil refugees living there. It is widely believed,
moreover, that the LTTE helps finance its insurgency through drug trafficking, although neither the
embassy nor the Police Narcotics Bureau (PNB) have any firm evidence to support this suspicion.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The government of Sri Lanka continued to implement a counternarcotics master plan
developed in 1994 in consultation with the UNDCP. A comprehensive counternarcotics legislative
package drafted by the National Dangerous Drugs Control Board (NDDCB), the government agency
responsible for coordinating national drug policies, was still under review by the government and had
not been presented to Parliament by the end of the year. The package focuses on three counternarcotics
issues: 1) Prohibiting narcoticsrelated money laundering and providing for asset forfeiture; 2) enacting
new legislation to implement the UN Convention and the 1990 SAARC Convention on Narcotic Drugs
and Psychotropic Substances, including provisions for extradition and mutual legal assistance; and 3)
Initiating new legislation providing for the treatment and rehabilitation of drug addicts. Sri Lanka is also
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in the process of drafting legislation on the control of precursor chemicals.
Illicit Cultivation and Production. Cannabis is the only illicit narcotic cultivated and produced in Sri
Lanka; however, cannabis grown in Sri Lanka has no effect on the United States. Many of the areas
where cannabis is grown are located in heavy jungle in the southeastern part of the island. In January,
the police detected a large 50acre cannabis plantation in the south of the country and destroyed the crop.
Police continued to rely primarily on informants to find the location of cannabis plants.
Regional Cooperation. Sri Lanka plays a leading role in regional antinarcotics cooperation. A computer
program developed by the Police Narcotics Bureau and funded by the US government hosts a regional
database of narcotics arrests and other information. The database is available to law enforcement
agencies throughout SAARC. The Drug Advisory Program of the Colombo Plan (an international
organization headquartered in Colombo, Sri Lanka) conducted a series of successful counternarcoticsrelated training programs in the region, some of which were funded by the US government. The US
ambassador in Thailand was a guest speaker at one such program.
Demand Reduction. The NDDCB continued an aggressive, nationwide public education campaign
which included a weekly radio program that reached audiences throughout the island; seminars for
judicial officers; hundreds of drug awareness seminars attended by students teachers and parents;
training programs on drug abuse prevention; youth camps for youth leaders; counseling programs at the
State Detention Home; and treatment programs at residential treatment centers. A familybased
prevention/treatment program begun in 1994 continued in 1997 and the number of people utilizing
rehabilitation centers continued to increase. The International Society of the Colombo Plan sponsored
several seminars aimed at reducing drug abuse among the youth of Sri Lanka; an embassy officer was
invited to speak at two of these programs in 1997.
Law Enforcement Efforts. The Police Narcotics Bureau, the Customs Service, and the Department of
Excise are collectively tasked with eradicating cannabis production. The police enjoyed success in
several major drug operations involving heroin and opium smuggling during the course of the year.
Seizures, however, were down through October 1997-61.8 metric tons, compared with fullyear figures
of 96.4 metric tons in 1996 and 59.4 metric tons in 1995. An estimated 10,499 people were arrested on
drugrelated charges in the first 10 months of 1997. This compares with fullyear figures of 14,794
arrested in 1996 and 13,487 arrested in 1995. An increasing number of police personnel concentrate on
military and security operations against the LTTE terrorist threat, perhaps explaining the decline in
seizures, despite other evidence of a modest increase in narcotics abuse and trafficking. Through
October 1997, most of those arrested for narcoticsrelated offenses had been prosecuted.
Corruption. There was no evidence that public officials were involved in narcotics trafficking in 1997.
The government set up in 1994 a permanent commission to investigate charges of bribery and corruption
against public officials. The commission reported no cases of drug-related corruption.
Agreements and Treaties. Sri Lanka is a party to the 1988 UN Drug Convention, as well as to the 1990
SAARC Convention on Narcotic Drugs and Psychotropic Substances. Enabling legislation for both
conventions has been drafted, but not yet presented to Parliament. The legislation as drafted will include
specific provisions for extradition for narcoticsrelated offenses. Since Sri Lanka is a member of the
British Commonwealth, extradition matters between Sri Lanka and the US are currently covered by the
1931 USUK Extradition Treaty. Sri Lanka is also a party to the World Customs Organization (WCO)
International Convention on Mutual Administrative Assistance for the Prevention, Investigation and
Repression of Customs Offenses the Nairobi Convention Annex X on Assistance in Narcotics Cases.
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Drug Flow/Transit. Heroin and hashish are the only narcotics that have been detected transiting Sri
Lanka in significant quantities, although five people were arrested in an opium smuggling case in March
1997. Most seizures take place at Katunayake International Airport near Colombo, but the Police
Narcotics Bureau believes that a substantial number of transhipments-mostly heroin from India-take
place along the Sri Lankan coast. Sri Lanka has no coast guard and its naval vessels are principally
engaged in operations against the LTTE, and thus there is little reliable information on maritime
transshipments of drugs. There is no evidence that narcotics transiting Sri Lanka have a significant effect
on the US.
As in previous years, the USG helped several Sri Lankan organizations in their counternarcotics efforts.
In 1997, the USG provided over $12,000 to the NDDCB and over $2,400 to the Federation of
Nongovernmental Organizations against Drug Abuse (FONGOADA) for equipment purchases. The
Netherlands Police also assisted the Sri Lankan Police Narcotics Bureau in expanding the PNB's
counternarcotics computer system. Sri Lankan police and customs officials also benefited from training
funded and conducted by the British Government.
IV. US Policy Initiatives and Programs
The US government works with Sri Lankan counternarcotics organizations in support of their efforts to
promote awareness of the dangers of narcotics among the general population. In addition to providing
occasional material and financial support, the US Embassy in Sri Lanka has actively participated in
community awareness seminars. The US government hopes to advance selfsufficiency and cooperation
among law enforcement and other government officials working on narcotics issues in Sri Lanka and the
region. In terms of regional efforts, the US has provided over half a million dollars to the Colombo
Plan's Drug Advisory program over the past two years-US $300,000 in 1997 alone.
Bilateral Cooperation. The US governmentfunded regional database on drug arrests, investigations,
and other information for SAARC law enforcement agencies, which became fully operational in 1995,
continued to be used with success throughout 1997. NDDCB officials were able to conduct their
outreach, preventive education and training programs effectively in 1997 with the help of audio visual
equipment provided by the US government in previous years. The participation of an Embassy officer at
drug prevention seminars helped gain publicity for those events, including newspaper and television
coverage.
The Road Ahead. US government officials will continue to work with Sri Lankan counternarcotics
organizations whenever possible, particularly by speaking or otherwise participating in seminars
addressing the drug problem. There is unlikely to be a significant increase in the amount of financial
assistance currently provided by the US government to the government of Sri Lanka. The most pressing
need, according to the PNB, is for training for new and relatively inexperienced police officials working
on counternarcotics matters.
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Washington, DC, March 1998
SOUTHEAST ASIA
AND
THE PACIFIC
AUSTRALIA
I. Summary
Australia is not a significant exporter of illicit narcotics, nor a center for drug related money laundering.
While Australia has the potential to be a transshipment point for Asian opiates to the US, there is little
evidence that this is occurring to any significant extent. Australian law enforcement authorities have
excellent working relationships with their US counterparts. In November 1997 Prime Minister, John
Howard presented a new narcotics policy in which he pledged to "get tough on drugs."
II. Status of Country
Statistics from "The Australian Illicit Drug Report" and from the Department of Human Services and
Health show that cannabis is the most widely used illicit drug, with approximately one-third of adults
having used cannabis at some point in their lives. Although there is some importation of cannabis, the
market is dominated by domestic production. Amphetamine continues to be the most commonly used
illicit drug after cannabis. It is of major concern to law enforcement agencies in Australia in light of data
suggesting that amphetamine users transition to heroin. Although heroin users make up a small
percentage of the population, the use of heroin obviously concerns law enforcement authorities and
health authorities. Heroin addiction is considered responsible for a large proportion of drug related crime
and contributes to numerous social problems, not to speak of injuries and deaths related to overdosing.
The main source of Australia's heroin continues to be Southeast Asia. The cocaine user population
remains relatively small in Australia, but heroin and cocaine seizures and arrests have increased slightly
over the past year. The use of LSD appears to retain some popularity in certain geographic regions and
among particular groups, but the drug is not particularly prevalent compared to other drugs. "Ecstasy"
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continues to be popular among those involved in the "rave" and dance cultures, although there are some
reports that "rave" parties are on the decline. "Rave" is a kind of intense dancing, on occasion to the
point of exhaustion; it is an attraction at certain nightclubs all over the world. There are no reports of
ecstasy manufacture in Australia. The majority of Australia's ecstasy comes from Europe and the United
Kingdom. The distribution and use of the drug appears to be increasing in Malaysia and Indonesia,
providing a likely trafficking route to Australia.
During 1997, debate over a proposal to establish heroin maintenance experiments with long-term addicts
in several areas, including Canberra, attracted considerable public interest and media coverage.
Ultimately, the Federal Government blocked the proposed project. But so called "harm reduction"
policies continue to have their supporters, including support for de-criminalization of marijuana.
III. Country Actions Against Drugs 1997
In November 1997, the Prime Minister issued a domestic policy statement entitled "Tough on Drugs". In
his statement, the Prime Minister pledged Australian dollars 87.5 million over a three years period to
fight the illegal drug trade. The Prime Minister characterized his plan as "an integrated and effective
national effort to combat the menace of illicit drugs." The Prime Minister's statement reads, in part,
"...This first installment involves:
1) Attacking the drug barons spending $43.8 million to prevent illegal drugs entering Australia by more
effective interception techniques.
2) Protecting our children spending $14 million to educate our children and the wider community about
the extreme danger of drugs.
3) Rehabilitation and research spending $29.8 million to re-integrate drug users into the community and
support frontline professionals such as GPS and hospital staff to adequately counsel users."
(Note: all the above figures are in Australian dollars, ($1 Australian = ca. $.65 US.)
Internationally, Australia continues to contribute to global, regional, and bilateral efforts to stem illicit
drug trafficking and minimize the harmful effects of drug abuse. Australia is a significant donor and an
active participant in international drug control fora such as the Commission on Narcotic Drugs and the
Dublin Group.
Accomplishments: The Prime Minister has renewed the GOA commitment to antinarcotics programs.
Three federal agencies and six state agencies devote considerable resources toward combatting the drug
problem. The Australian Federal Police (AFP) and DEA (Drug Enforcement Administration) maintain
representatives in each others' countries to coordinate their efforts against drug trafficking.
Corruption: Australian authorities respond strongly to all instances of official corruption, and prosecute
cases involving criminal behavior. The USG has no evidence the GOA facilitates the illicit production or
distribution of illegal drugs, or engages in drug trafficking or the laundering of drug proceeds.
Agreements and Treaties: A Mutual Legal Assistance Treaty with the US was signed in 1997, and is
awaiting advice and consent to ratification by the US Senate. A US-Australia Extradition Treaty is in
effect. The US also has a Customs Mutual Assistance Agreement (CMAA) with Australia. Australia
cooperates closely with the US and third countries to counter money laundering, and is active in the
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Financial Action Task Force.
Cultivation/Production: Cannabis is the only illicit drug known to be cultivated in Australia. Crop size
has not decreased in recent years despite vigorous eradication efforts. GOA law enforcement authorities
report an increase in the use of sophisticated indoor and hydroponic cannabis growing operations. They
also report increased use of boobytraps to protect areas of outdoor cultivation. The manufacturing of
amphetamine and methamphetamine is increasing and there is some manufacture of small quantities of
synthetic heroin known as "homebake." All of these illicit drug operations are targeted on the Australian
domestic market and have no known effect on the US. Australia, Tasmania, specifically, is also a licit
opium producer. The Australian Poppy Advisory and Control Board has instituted an excellent control
regime to assure that there is no "leakage" from licit production to the illicit market. Australia is the
third largest exporter of licit opium to the US after India and Turkey. Australia's exports of licit opium
alkaloids to the United States market are restricted by a long-standing USG policy, called the "80-20
Rule" which requires that 80 per cent of licit opium bought by US pharmaceutical companies be
purchased from the two "traditional" growers, India and Turkey. Australia has indicated interest in
increasing its sales of licit opium to the US and the government has raised this issue regularly.
Drug Flow/Transit: According to DEA reporting, Australia continues to be an attractive target for
Southeast Asian heroin trafficking organizations and South American cocaine trafficking organizations.
However, there is little or no evidence of these drugs transiting Australia to the US
IV. US Policy Initiatives and Programs
The primary USG goals remain the assessment of US-Australia trafficking trends and mutual assistance
in gathering intelligence on drug trafficking groups and their effects on international markets.
Cooperation between GOA and USG authorities is excellent, with the exchange of narcotics intelligence
proceeding without any difficulty. There have been no problems regarding the extradition of narcotics
criminals between the two countries. DEA makes USG counternarcotics training available to GOA law
enforcement authorities.
The Road Ahead: The US will continue to monitor transshipment issues in Australia, particularly those
relating to trafficking trends between the US and Australia. The USG is also undertaking efforts to assist
the GOA in dealing with the increasing problem of cocaine traffic.
BURMA
I. Summary
Burma continues to be the world's largest source of illicit opium and heroin. Production declined slightly
from 1996 levels. The 1997 crop estimates indicate there were 155,150 hectares under opium poppy
cultivation which could yield up to a maximum of 2,365 metric tons of opium gum - enough to produce
an estimated 197 metric tons of heroin and satisfy the US heroin market many times over. The Burmese
government increased seizures of opium and heroin and destroyed more heroin refineries than in the
past, and engaged in greater drug control cooperation with the USG and Thailand. Overall efforts,
however, paled in comparison with the narcotics problem and continued to suffer from a lack of
resources and political will. There was no discernible effort during the year to stop money laundering,
suspected to be carried out on a massive scale. The government systematically encouraged leading drug
traffickers to invest in infrastructure and other domestic projects.
The ethnic drug trafficking armies with whom the government has negotiated cease-fires (but not
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permanent peace accords), such as the United Wa State Army and the Myanmar National Democratic
Alliance Army (MNDAA-Kokang Chinese), remain armed and heavily involved in the heroin trade.
Through cease-fire agreements, the GOB appears to have given the trafficking armies free hand to
continue their trade, although there are reports that the agreements provide for an end to the trade at
some future date.
Among the top leaders of those ethnic groups believed by the USG to be involved in the heroin and/or
amphetamine trade are: Sai Lin (Lin Mingxian) of the Eastern Shan State Army (ESSA); Yang
Maoliang, Peng Jiasheng and Liu Goushi of the MNDAA; Pao Yuqiang, Li Zuru and Wei Xuekang of
the United Wa State Army; Mahtu Naw of the Kachin Defense Army (KDA); Mong Sa La of the
Monkoe Defense Army (MDA); and Yawd Serk of the Shan United Revolutionary Army (SURA),
which was formerly allied with drug lord Chang Qifu's (Khun Sa's) Mong Tai Army. Chang Qifu
disbanded his army in January 1996 in return for generous terms of surrender, which allow him to avoid
criminal procedures. Reporting continues to suggest that Chang remains involved, at least indirectly, in
the narcotics trade through his subordinates.
A number of ethnic groups announced opium free areas in 1997, but they did not offer details on how
these objectives would be met. In the past, similar pledges have been unfulfilled. Toward the end of the
year, there were reports of crop eradication in some of these areas.
There is reason to believe that money laundering in Burma and the return of narcotics profits laundered
elsewhere is a significant factor in the overall Burmese economy, though the extent is impossible to
measure accurately. Political and economic constraints on legal capital inflows magnify the importance
of narcotics-derived funds in the economy. An underdeveloped banking system and lack of enforcement
against money laundering have created a business and investment environment conducive to the use of
drug-related proceeds in legitimate commerce.
Drug abuse--in particular intravenous drug use--is on the rise in Burma and with it an alarming spread of
the HIV/AIDS virus, especially in the ethnic minority areas that are the source of the drugs.
II. Status of Country
Burma provides over half of the world's supply of illicit opium and has done so for years. According to
USG estimates, Burmese opium production has remained at high and stable levels for the past eight
years, since doubling in 1989, the year after the State Law and Order Restoration Council (SLORC),
now known as the State Peace and Development Council (SPDC) took power. This increase may be
correlated with political accommodations the regime reached with several drug trafficking insurgent
groups, and the regime's abandonment of effective eradication efforts. (As noted above, at the end of the
year there were reports of renewed interest in eradication.) The US also ended its narcotics assistance in
1988, in response to massive human rights abuses and further disintegration of the rule of law.
Burma currently accounts for approximately 90 percent of the total production of Southeast Asian
opium. Most of this supply of illicit opiates is produced in ethnic minority areas of Burma's Shan State.
Over the past year, the GOB has increased its presence in this region, particularly the area formerly
under the control of Chang Qifu. Since 1989, Rangoon has negotiated cease-fire agreements with most
of the drug-trafficking groups that control these areas, offering them limited autonomy and development
assistance in exchange for ending their insurgencies. The regime's highest priority is to end insurrection,
and counternarcotics interests in these areas are a secondary consideration. Moreover, these cease-fire
agreements have had the practical effect of condoning money laundering, as the government encouraged
these groups to invest in "legitimate" businesses.
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In the past two years, as overt military challenges to Rangoon's authority from the ethnic groups have
diminished somewhat, the government, while maintaining its primary focus on state security, has
stepped up its counternarcotics enforcement efforts. The GOB garrisoned troops on a year-round basis
for the first time in the Kokang region during 1997. (The Wa, however, have not accepted a permanent
GOB presence.) Perhaps at GOB urging, the MNDAA, the KDA, and the MDA in northern Shan State
declared their intention to establish opium-free zones in territory under their control by the year 2000.
Earlier in the year, ESSA leader Sai Lin had also declared an opium-free zone in the area known as
Special Region-4 in northeastern Shan State. This region, however, has traditionally had low density
opium cultivation. The Wa announced opium free zones in 1995.
The GOB, for its part, stated that it would support these eradication efforts with development assistance
in the form of infrastructure improvements and advice on crop substitution. The GOB also requested
USG assistance in verifying whether these groups fulfill their commitments. The USG has requested
additional information to pinpoint the areas in question. This information has been provided. In view of
China's long border with the Wa area, the GOB asked China for assistance in curbing Wa trafficking.
Ethnic groups have made "opium free" pledges since 1989, but, with the exception of the Kachin, have
shown no success in enforcing their stated intentions. In view of the extensive opium cultivation in
northern Shan State, the area of greatest opium density, any reduction in cultivation would require
considerable eradication, law enforcement and alternative development efforts by the authorities.
Implementation of such a program would also require a spirit of cooperation between the government
and ethnic groups. It is too early to assess these latest pledges.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Burmese counternarcotics efforts improved during 1997, especially with regard to
heroin and opium seizures as well as the destruction of heroin refineries. A quieter security situation in
parts of northern Shan State permitted the Burmese anti-drug forces to conduct more vigorous law
enforcement efforts, especially in the Kachin and Kokang regions. The Kokang area, in particular, is a
major center of narcotics cultivation and refining. These efforts must be stepped up if they are to have a
significant impact on the overall trafficking problem.
With support from DEA and US embassies in Rangoon and Bangkok, the Burmese and Thai
governments agreed to undertake joint operations against drug trafficking along Thailand's northern
border with Burma. To this end, they agreed in principle to establish a joint anti-drug task force in
Tachilek, Burma, and Mae Sai, Thailand. This approach, which has been under consideration for several
years, has the potential to permit coordinated enforcement operations in one of the most active
trafficking areas in Southeast Asia.
The GOB also apprehended and rendered to Thailand, Li Yunchung, a former associate of Chang Qifu
who had bribed his way out of a Thai jail and fled to Burma. Li had been awaiting extradition by the
Thai to the United States on narcotics charges. Acting on intelligence provided by DEA through the US
Embassy in Rangoon, Burmese authorities arrested Li in April and formally turned him over to Thai
authorities in May. The GOB understood that the Thai would extradite Li to the United States. This was
the first time the Burmese had returned to Thailand a high profile drug trafficker sought by the US.
The Burmese continued to refuse the rendition of drug lord Chang Qifu on the grounds that he had not
violated his 1996 surrender agreement. This agreement reportedly stipulated that if Chang Qifu ended
his insurgency and retired from the drug trade, the GOB would provide him with security in Rangoon
and allow him to conduct legitimate business. Chang Qifu confirmed in a public interview his plans to
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fund construction of a new Rangoon-Mandalay highway valued at some $250 million; a Burmese
cabinet member confirmed the accuracy of Chang's statement. Burmese authorities assert that he will
continue to enjoy immunity from prosecution in Burma or rendition to another country as long as he
does not violate his surrender agreement. This issue remains a source of friction with the US due to
standard international legal principles calling for punishment of traffickers and other international
criminals. In addition, Chang Qifu reportedly remains involved in the drug trade through his
subordinates, thereby violating the reported terms of the surrender agreement.
The SPDC affirmed its intention to increase its efforts to implement the ongoing "master plan for the
development of border areas and national races." The plan calls for a program of integrated development
combined with law enforcement aimed at improving the living standards in the ethnic areas and
providing viable economic alternatives to opium cultivation. Little effort had been made by the end of
1997 to link this plan, conceived in 1990, to measurable reductions in opium cultivation in the ethnic
areas.
The GOB and UNDCP completed in late 1996 a 12-month pilot integrated rural development project in
the Wa region initiated to take advantage of the United Wa State Army's unilateral decision announced
in 1995 to establish five "opium poppy-free zones" in its area of control in order to bring about a gradual
reduction of opium cultivation. The pilot project was designed to test the feasibility of a planned fiveyear, 15 million dollar rural development project aimed at opium income and crop substitution. In
contrast to the UNDCP's previous projects in Mong Yang and Tachilek, the Wa project will incorporate
a monitoring and evaluation component designed to measure progress in eliminating opium cultivation.
As an integrated development scheme, it will also focus on infrastructure as well as the provision of
educational and health facilities in the Ho Tao and Mong Pawk districts of the Wa region.
Accomplishments. Overall, the Burmese drug control situation remained bleak during 1997. The
Burmese effort to seize heroin and opium improved markedly in percentage terms during 1997, but,
even so, the total seized was less than one per cent of Burma's estimated annual opium/heroin output.
The combined police and military narcotics task forces seized a record 1401 kilos of heroin, a more than
two-fold increase over 1996 seizures, which totaled 493 kilos. Seizures of opium gum rose to 7884
kilos, compared with 1300 kilos in 1996. The seizure of 5.04 million amphetamine tablets roughly
equalled last year's totals; the two-year trend in seizures of precursor chemical, acetic anhydride, was up
sharply, although 1997 seizures fell from the level in 1996. The authorities destroyed 33 heroin
refineries during the year, compared with 11 the previous year. Most of the refineries were located using
information provided by DEA from the US Embassy in Rangoon. In November, the authorities made the
largest heroin seizure ever recorded in Burma - 297 kilos near Muse in northern Shan State on the
Chinese border.
Law Enforcement Measures. The 1993 narcotic drugs and psychotropic substances law brought the
Burmese legal code into conformity with the 1988 UN Drug Convention. As such, the 1993 law
contains useful legal tools for addressing money laundering, the seizure of drug-related assets, and the
prosecution of drug conspiracy cases. However, by the end of the year, these provisions had remained
apparently unused as Burmese police and judicial officials had been slow to implement the law,
targeting few if any major traffickers and their drug-related assets. Burmese drug officials claim they
lack sufficient expertise to deal with money laundering and financial crimes, which is not a sufficient
explanation of the near total failure to address money laundering, which is believed to be carried out on
a massive scale.
Formally, the Burmese government's drug enforcement effort is led by the office of the Central
Committee for Drug Abuse Control (CCDAC), which is comprised of personnel from various security
services, including the police, customs, military intelligence, and the army. CCDAC now has 18 drug
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enforcement task forces around the country, most located in major cities and along key transit routes
near Burma's borders with China, India and Thailand. The CCDAC, which is under the control of the
Directorate of Defense Services Intelligence (DDSI) and relies, in part, on military personnel to execute
law enforcement duties, continues to suffer from a lack of adequate resources to support its law
enforcement mission.
Corruption. There is no evidence that the government, on an institutional level, is involved in the drug
trade. However, there are persistent and reliable reports that officials, particularly army personnel posted
in outlying areas, are involved in the drug business. Army personnel wield considerable political clout
locally, and their involvement in trafficking is a significant problem. In April, the authorities arrested 11
officers - including one lieutenant colonel who received a 25-year prison term - for colluding with drug
traffickers in the operation of a heroin lab in northern Shan State. The Burmese have said that they
would welcome information from others on corruption within their ranks.
The lack of a vigorous enforcement effort against money laundering also leaves Burma vulnerable to the
growing influence of traffickers through the use of drug proceeds in legitimate business ventures.
Businesses owned by family members of former or present traffickers have invested heavily in
infrastructure projects, such as roads and port facilities, as well as in hotels and other real estate
development projects during the year. It is believed that drug profits formed the seed capital for these
otherwise legitimate enterprises.
Agreements and Treaties. Burma is a party to the 1961 Single Convention, the 1971 UN Convention
on Psychotropic Substances and the 1988 UN Drug Convention. However, the Rangoon regime
maintains its reservation on extradition of Burmese citizens to other countries. The United States does
not have a mutual legal assistance treaty (MLAT) with Burma. It is the opinion of the US Government
that a US-U.K. extradition treaty, which was accepted by the post-independence Burmese government in
1948, remains in force and is applicable for the US extradition of drug fugitives from Burma. The GOB
continues to refuse to recognize the applicability of this treaty. In May, the GOB, with UNDCP, signed a
six-nation (Burma, Cambodia, China, Laos, Thailand, Vietnam) memorandum of understanding on a
sub-regional action plan aimed at controlling precursor chemicals and reducing illicit drug use in the
highlands of Southeast Asia. The GOB signed bilateral drug control agreements with India in 1993, with
Bangladesh in 1994, with Vietnam in 1995, and with the Russian Federation, Laos, and the Philippines
in 1997.
Cultivation and Production. Burma remains by far the world's largest producer of opium. Potential
production decreased slightly from 1996 levels; opium cultivation declined an estimated 5 percent and
production declined an estimated 8 percent. After cultivation increased by 40 percent and potential
production doubled in 1989 following the SLORC coup, cultivation and production have remained at
this high level over the ensuing eight years. Since the early 1990's the areas of most intense cultivation
have gradually shifted from southern to northern Shan State. Although cultivation has expanded in areas
under government control, the bulk of the opium crop has been in areas controlled by ethnic minority
groups such as the United Wa State Army, the Myanmar National Democratic Alliance Army (Kokang
Chinese), the Mongko Defense Army (Kachin), the Kachin Defense Army, and the Palaung National
Organization, with which the Burmese military junta has sought cease-fires since 1989. In the last two
years, however, the GOB has begun to increase its presence in areas previously under ethnic control.
Government eradication efforts increased at the end of 1997 with the launching of a campaign in
Northern Shan State. In addition, the GOB announced plans to conduct a baseline survey of opium
cultivation from January to March 1998, aimed at determining actual opium production (as opposed to
potential production the USG measures) throughout the country.
Drug Flow/Transit. Most heroin in Burma is produced in small, mobile labs located near the borders
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with Thailand and China in Shan State in areas controlled by ethnic narco-insurgencies. As a result of
increased deployment of troops in northern Shan State and more aggressive law enforcement efforts, the
GOB destroyed a record, but still small, number of labs. A growing amount of methamphetamines is
reportedly produced in labs co-located with heroin refineries in the Wa region and the former Shan
United Army territory in southern Shan State. Heroin and methamphetamines produced by Burma's
ethnic groups are trafficked largely through unmarked transit routes crossing the porous Chinese and
Thai borders, and to a lesser extent the Indian, Bangladesh and Lao borders, as well as through Rangoon
onward by ship to other countries in the region. Although Thailand remains an important route for
Burmese heroin to exit Southeast Asia, trafficking through China and other countries is on the increase.
Traffickers continued a trend noted last year of moving a growing amount of heroin through central
Burma, often from Lashio, through Mandalay to Rangoon or other seaports such as Moulmein, for
seaborne export to Singapore or Malaysia. Trafficking routes leading through Kachin and Chin states
and Sagaing Division in northern Burma to India continued to grow, but were used to a lesser extent.
Acetic anhydride, an essential chemical in the production of heroin, is imported primarily from China, as
is ephedrine, the principal chemical ingredient of methamphetamines.
Demand Reduction. Drug abuse is a growing problem in Burma. Official estimates put the drug
addicted population at approximately 60,000, but UNDCP and NGOs working in the health sector
estimate the actual population at 400,000-500,000. The GOB announced plans to undertake a
nationwide baseline survey of drug abuse in early 1998, which is designed to provide a more accurate
census of the addict population. Heroin is cheap in Burma, and its intravenous use is contributing to the
rapid spread of HIV/AIDS, particularly in the Kachin and Shan states. According to the GOB's "Rapid
Assessment Study of Drug Abuse in Myanmar" sponsored by the Ministry of Health and UNDCP in
1995, drug treatment services are not reaching most drug users because of a lack of facilities, lack of
properly trained personnel, and inadequate treatment methods. In November, the GOB gave Cabinet
approval to a $300,000 UNDCP-funded demand reduction project to be implemented by the NGO,
"World Concern", in Kachin State.
IV. US Policy Initiatives. Programs
Direct material USG counternarcotics aid to Burma has remained suspended since 1988, when the
Burmese military brutally repressed the pro-democracy movement. USG-supported initiatives such as an
aerial eradication program have not been carried out since 1988. However, the USG funds, under
congressional authority, a two-year, $500,000 crop substitution project being carried out by the NGO
"Committee of 101 Veterans Inc." in the Kutkai area of northern Shan State. The aim of the project is to
increase farm incomes by improving yields of corn and other crops so that farmers have economic
alternatives to opium cultivation. Preliminary results of the project's first harvest indicate the feasibility
of increasing corn yields by 3-5 times.
Currently, the USG engages the Burmese government on counternarcotics on a limited level. DEA,
through the US Embassy in Rangoon, shares drug-related intelligence with the GOB and conducts joint
drug enforcement investigations with Burmese counternarcotics authorities. Various US agencies have
joined Burmese counterparts in conducting opium yield surveys in the mountainous regions of the Shan
State in 1993, 1995, and 1997. Results from the surveys give both governments a more accurate
understanding of the scope and magnitude of Burma's opium crop.
The US government continues to urge the Burmese government to take serious steps to curb Burma's
runaway opium production and heroin trafficking. Specifically, the Rangoon regime has been
encouraged to:
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prosecute drug trafficking organizations and their leaders, such as Chang Qifu, and deprive them
of assets derived from the drug trade;
take action against drug-related corruption, including prosecution and appropriate punishment of
corrupt officials and money launderers;
take action against fugitive drug traffickers and render them through third countries, as was done
in the Li Yunchung case;
undertake opium poppy eradication on a wide scale in areas under its direct control or immediate
influence;
press ethnic groups such as the Wa, the Kokang, and the Kachin who have pledged to create
opium-free zones in their regions, to make good on their commitments;
enforce existing anti-drug, conspiracy and money laundering legislation;
provide strong support to multilateral drug control projects in the Shan State.
Bilateral Cooperation. USG counternarcotics cooperation with the Burmese regime is restricted to
basic law enforcement operations and involves no bilateral material or training assistance from the US
due to US concerns over Burma's commitment to effective counternarcotics measures, human rights, and
political reform. DEA's liaison with Burmese police and military--conducted mainly through DEA's
office in Rangoon--will continue with a focus on providing intelligence on enforcement targets and
coordinating investigations of international drug trafficking groups. During the year, the USG
encouraged contacts between Burmese and Thai law enforcement agencies and facilitated joint anti-drug
operations.
The Road Ahead. Based on experience in dealing with large-scale narcotics trafficking problems
elsewhere around the world, the USG recognizes that ultimately large scale and long term international
aid, including development assistance and law enforcement aid, will be needed to curb significantly drug
production and trafficking. The USG is prepared to consider resuming appropriate assistance contingent
upon the GOB's unambiguous demonstration of a strong commitment to counternarcotics, rule of law,
punishment of traffickers and major trafficking organizations (including asset forfeiture and seizure),
countercorruption, eradication of opium cultivation, destruction of drug processing laboratories,
enforcement of money laundering legislation, and respect for human rights.
Click here for Burma table
CAMBODIA
I. Summary
Cambodia is used as a transit point for Southeast Asian heroin and is a source of marijuana for export. It
experienced violent internal conflict in early July of 1997 between military forces loyal to its two major
parties brought together in a coalition government. First Prime Minister Prince Ranariddh fled the
country and a number of his political supporters were killed. USG assistance programs for other than
humanitarian purposes have been suspended.
Prior to the outbreak of fighting, Cambodia had taken steps toward effective control of drug trafficking
and transiting in Cambodia. The National Assembly had passed a comprehensive counternarcotics law
on December 3, 1996. A new National Anti-Drug Unit, formed in November 1996, was to have been the
model for development of similar units throughout Cambodia. This unit was the focus of USG training
and equipment assistance, which has been suspended since July.
Following the July 5-6 conflict, remnants of the old anti-narcotics police unit have been restored and
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reorganized with new leadership. It is, nonetheless, not unlikely that drug traffickers may already be
taking advantage of instability and using Cambodia with greater frequency as a transit point for illicit
narcotics.
Prior to the outbreak of armed conflict in July between the coalition parties, high-level political
bickering and finger-pointing over narcotics policy hampered law enforcement efforts. More recently,
the combination of the drug law, a lower level of political in-fighting and the apparent support of highlevel government officials appears to have energized enforcement efforts.
Cambodia is not yet a party to the 1988 UN Drug Convention or any of the other UN narcotic
conventions.
II. Status of Country
Cambodia shares borders with Thailand, Laos and Vietnam. Cambodia faces an active, but diminished,
Khmer Rouge insurgency and fighting by resistance forces loyal to ousted First Prime Minister Prince
Ranariddh on its northern and western borders. Laws and legal institutions, ignored following the July
fighting, now appear to be functioning again. Cambodia has approximately 30 banks, but the National
Bank only recently received legal authority to regulate them. The Royal Cambodian Government
(RCG), recovering from over 20 years of warfare and internal strife, is heavily dependent on external
assistance, and most ministries, including those charged with police functions, lack sufficient funds to
cover even salaries. The lack of funds for training and operations makes Cambodia an attractive target
for drug traffickers and money launderers operating in Southeast Asia. Solid information about the full
extent of money laundering in Cambodia is still lacking. The size of reported seizures, coupled with
anecdotal evidence, lends credence to other information suggesting that Cambodia is a viable trafficking
route and appears to be emerging as a magnet for ethnic Chinese groups involved in drug trafficking,
money laundering, illegal gambling dens, counterfeiting US and other currencies, and alien smuggling.
Marijuana is produced in the northern, central and southeast provinces, in large part for export. There is
no accurate estimate of the amount of land committed to marijuana production. Reportedly over the past
year, the importation and sale and consumption of the drug "ecstasy" has become a problem, notably in
the urban areas such as Phnom Penh. International trafficking in this drug is also growing rapidly.
Cambodian enforcement authorities focus their efforts principally on heroin trafficking, the eradication
of domestic marijuana, and trafficking in "ecstasy" and methamphetamine. In 1997 the presence of
Chinese heroin trafficking networks in Cambodia seemed to expand, while the presence of West African
groups seemed to diminish. Target countries for the trafficking include the United States, Canada, Hong
Kong and Europe.
III. Country Actions Against Drugs in 1997
Policy Initiatives. In 1996, Cambodia's constitutional monarch signed a decree establishing a National
Counternarcotics Authority whose chairmen are Cambodia's two Prime Ministers and whose ViceChairman is the Minister of Justice. This authority was to have become operational in mid-December
1997. Additionally, the Ministry of Justice, with the assistance of a USG-funded advisor, concluded a
draft of anti-narcotics legislation which was passed by the Parliament on December 3, 1996. The
legislation contains a provision outlawing the laundering of drug proceeds. The legislation commits the
RCG to becoming a party to the 1961 Single Convention on Narcotics Drugs, the 1971 Convention on
Psychotropic Substances and the 1988 UN Drug Convention.
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Accomplishments/Law Enforcement Efforts. During 1997, the RCG adopted a more aggressive
enforcement posture. Anti-narcotics enforcement agencies appear to have conducted increasingly
thorough investigations during the year, targeting trafficking organizations rather than individuals. They
have shared intelligence and have responded promptly to requests for assistance. Active involvement of
the police, whose raids on night clubs and other known venues of the sale and consumption of designer
drugs, has increased in frequency. Elimination of the sale, transport and financing of narcotics remained
a focus of anti-narcotics activities by the authorities. Asset seizure in drug cases is not widely practiced
in Cambodia, although the seizure of vehicles is routine. Arrests of narcotics traffickers were reported
frequently in Phnom Penh and other provincial areas where nightly patrols of discotheques netted police
11,517 amphetamine ("ecstasy") tablets and other drugs and drug paraphernalia. Typically the drugs
were brought into Cambodia from abroad. These efforts have been undertaken despite the fact that
enforcement agencies often lack even minimal resources. National and municipal police charged with
anti-narcotics law enforcement activities generally lack basic training and access to basic law
enforcement techniques and drug enforcement measures, including drug identification. Drug
enforcement units still have no secure communications equipment or facilities.
Corruption. On several occasions in 1997, military and police personnel were arrested for involvement
in narcotics-related activities. There is some indication that an effort is being made to identify and target
corrupt military officials involved in drug trafficking. Unproven, and apparently uninvestigated,
allegations of corruption at high levels in the government remain a cause for concern and continue to
tarnish Cambodia's international standing.
Agreements and Treaties. Cambodia is not a party to any of the UN narcotics conventions at this time.
Extradition cooperation with the United States in narcotics-related cases is not possible, as there is no
formal extradition relationship between the United States and Cambodia. However, Cambodia has
assisted the US this year, and in the past, in deportation requests. Mutual legal assistance between
Cambodia and the United States Drug Enforcement Administration (DEA), the United States Customs
Service and other USG agencies is generally good.
Domestic Programs. Government authorities do not believe that domestic opiate use is a major
problem. Anecdotal evidence suggests that narcotics use by foreigners continues to increase. Cannabis
use in food preparation continues to be widespread. Abuse of pharmaceutical drugs, which are not
presently regulated in an effective manner, is common. Abusers of illicit drugs often inject them,
creating a high HIV/AIDS risk among this group. The RCG is still discussing the passage of a new
pharmacy law and subsequent crackdown on unlicensed pharmacies. There are no government demand
reduction programs in place in Cambodia at this time.
IV. US Policy Initiatives and Programs
Policy Initiatives. USG policy initiatives prior to July of 1997 included funding training and equipment
for counternarcotics enforcement units, a drug analysis laboratory (not completed at the time conflict
broke out), and offering support for an adviser to the Ministry of Justice to assist with passage of the
new drug law. A law enforcement coordinator to be assigned to the Embassy was also under
consideration when the July conflict broke out. The suspension of all but humanitarian assistance has
halted USG counternarcotics- and law enforcement-related assistance efforts.
Bilateral Cooperation/The Road Ahead. The RCG has stated that it continues to welcome bilateral
cooperation in training by US authorities such as DEA and other elements of the USG. DEA personnel
had visited Cambodia monthly to consult with Cambodian anti-narcotics forces and provide customized
training until the outbreak of the July 5-6 conflict, which led to the cutoff of US bilateral assistance.
Political in-fighting and the finger-pointing accompanying it, however, as well as attempts by the
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various parties to use allegations about narcotics involvement on the part of opponents to draw USG
personnel into appearing to support one or another faction, vitiated the value of those consultations and
training efforts. In addition, little has been done by the RCG to assuage international concerns about
possible high-level narcotics-related corruption, with the result that Cambodia's commitment to
counternarcotics efforts is, today, open to serious question.
CHINA
I. Summary
China intensified its efforts to combat drugs in 1997, declaring a nation-wide anti-drug campaign in
April. As part of the campaign, China committed more resources to counternarcotics programs, focusing
special attention on anti-drug education. The campaign resulted in greater law enforcement vigilance
and increased seizures of opium, heroin, and precursor chemicals. The rise in the amount of chemicals
seized was particularly dramatic, as improved monitoring led to a four-fold increase over the amount
seized in 1996. The Chinese Government also took steps to strengthen anti-drug legislation, and for the
first time specifically identified money laundering as a crime. China also engaged in closer cooperation
with US law enforcement agencies. China transferred a Burmese national to US custody in April to
stand trial for drug trafficking, agreed with the United States to establish reciprocal drug enforcement
offices in each other's capitals, and agreed to establish a direct e-mail link with the Drug Enforcement
Administration (DEA) to facilitate the exchange of information on drug cases. China is a party to the
1988 UN Drug Convention as well as to the 1961, 1971 and 1975 Conventions.
II. Status of Country
China is one of the most prominent drug transshipment countries in Asia. As a result of China's close
proximity to the Golden Triangle, drug traffickers have found that China is a convenient path by which
to move narcotics, particularly heroin, to destinations in the West. Most of the heroin, perhaps as much
as 90 percent, comes from Burma, which shares a 2000-kilometer border with southwestern China. Drug
traffickers from other Southeast Asian nations, such as Vietnam and Laos, have also used China as a
transit route, albeit with less frequency.
Chinese police report that they have found only a few drug laboratories or processing facilities. None of
these produced large quantities of drugs nor did they have the equipment to produce advanced, synthetic
drugs. Chinese laws stipulate that drug trafficking is a crime punishable by death.
Chinese officials have stated that they have yet to uncover a major case of money laundering related to
drug trafficking. The country's loose banking system, however, makes it a prime target for possible
exploitation by drug criminals. As a reflection of the seriousness with which the Chinese Government
regards the potential for money laundering, on October 1 China implemented a new law specifically
addressing this crime.
China is a major producer of precursor chemicals. The ephedra plant, from which the precursor
ephedrine is made, grows in the wild in northern China. China also legally exports the drug precursor
potassium permanganate, which is used to make cocaine. In the past few years, China has become one of
the most vigilant monitors of precursor chemical exports, and other countries frequently seek out China's
advice on this issue at international conferences. China monitors all 22 of the chemicals on the UN's
watch list and one province, Yunnan, even goes further and monitors 28 chemicals. One indication of
increased Chinese vigilance toward precursor chemical exportation was the seizure this year of 300
metric tons of precursor chemicals intended for illegal shipment overseas, a four-fold increase over the
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amount seized in 1996.
Social and economic changes in China in recent years have resulted in a sharp increase in domestic drug
consumption. Chinese media reported that more than 70 percent of the counties and municipalities in
China had discovered drug abuse in their communities. The most commonly used drugs were heroin,
opium, stimulants and depressants. Chinese law enforcement authorities were alarmed this year by the
discovery of the drug "ecstasy" in some large cities. Police reported eight cases nationwide. In each
case, the synthetic drug had been smuggled into China from Hong Kong or Burma.
III. Country Actions Against Drugs in 1997
China has met or is actively seeking to meet the goals and objectives of the 1988 UN Drug Convention.
China has been an active participant in all UNDCP conferences and has proposed programs to assist
certain countries combating drugs. China's counternarcotics efforts are coordinated by a coalition of 18
Chinese Government bodies called the National Narcotics Control Commission. This group directs
policy, enforcement, research and international cooperation. The law enforcement side of China's drug
policy is the responsibility of the Ministry of Public Security--China's police force. Upon the reversion
of Hong Kong to the sovereignty of the PRC in July, the PRC made the 1988 UN Drug Convention
applicable to Hong Kong for the first time.
Policy Initiatives. The Chinese Government implemented a nationwide anti-drug campaign in April
1997, resulting in a greater number of arrests and an increased amount of drugs seized. This campaign
included media and education efforts as well as law enforcement vigilance. The central government
increased its counternarcotics budget to 34 million RMB (about 4.2 million USD) from about 30 million
RMB (about 3.8 million USD) the previous year. Each province also contributed additional funds to
combat drugs. Yunnan Province, the area of China hit hardest by the drug trade, earmarked 10 million
RMB (about 1.25 million USD) for drug control programs within Yunnan. In the past, Chinese
counternarcotics efforts were focused on controlling drugs via law enforcement programs. In 1997, the
Chinese tried to strike a better balance in its approach to counternarcotics by establishing prevention
education programs. In this vein, the government used labor associations, women's groups, and youth
groups to spread information about the danger of drug use.
In March, China amended its criminal law to include more than 250 new statutes, including several
having to do with drug offenses. In addition to specifically noting that money laundering was now a
crime, the law also added methamphetamine trafficking to the list of specific drug offenses punishable
by severe penalties. Heroin and opium trafficking were specified in previous Chinese laws. China also
specified that illegal trade in precursor chemicals would be punished severely.
Accomplishments. The anti-drug campaign was a principal reason for the across-the-board increase in
the amount of drugs seized by police. The most dramatic results were in the area of precursor chemicals.
In the first ten months of 1997, police seized more than 300 metric tons of illegally-exported chemicals,
four times the amount during the same period of 1996. This reflected increased efforts by Chinese police
to monitor more effectively the production of chemicals. Police seizures of heroin and opium also both
increased by about 15 percent.
Law Enforcement Efforts. While there was no single case in 1997 as large as the 1996 600-kilogram
heroin seizure in Guangdong Province, police reported that in most areas of China, there were increases
in the amount of drugs seized and the number of arrests. As a result of China's nationwide anti-drug
campaign, the media frequently focused on successful law enforcement operations and significant
seizures. The national budget for counternarcotics programs grew by about 15 percent over the previous
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year as a result of the anti-drug campaign.
Corruption. Corruption in China is becoming increasingly pervasive. Rapidly changing economic
conditions coupled with economic liberalization have spawned a climate conducive to corruption and
greed. Inconsistent implementation of anti-corruption laws has also hampered efforts to control graft.
The Chinese Government, however, has passed specific laws dealing with officials found guilty of the
use, manufacture, or delivery of narcotics, and there is no evidence that senior government officials are
involved in the drug trade. China's policy strictly forbids any drug trafficking and high-level officials
have rigorously attacked the spread of the drug trade in Chinese society. Nonetheless, the juxtaposition
of low-paid law enforcement and other government personnel with the lucrative drug business,
particularly in those areas along drug transit routes, creates the potential for corruption.
Agreements and Treaties. China is a party to the 1988 UN Drug Convention, as well as the 1961
Single Convention, 1972 Protocol, and the 1971 Convention on Psychotropic Substances. China has
made a strong push to sign mutual legal assistance agreements and extradition treaties with foreign
countries. It now has signed more than 30 such agreements with 24 countries. In 1997, China signed a
mutual legal assistance agreement with India, with special attention to narcotics trafficking. China and
the United States continue to discuss a customs mutual assistance agreement. In October 1997, in a Joint
Statement at the Presidential Summit, China agreed to establish a Joint Liaison Group with the US for
law enforcement cooperation in specific areas, including narcotics trafficking, and to begin consultations
aimed at concluding a mutual legal assistance agreement.
Cultivation/Production. There is limited opium production in China, but Chinese officials report that
about ten percent of the opium seized by police is domestically produced. Opium produced in China
appears to be mainly for domestic consumption. China is also the producer of precursor chemicals used
for the manufacture of both legal and illegal drugs. Chinese police closely monitor all precursor
chemicals on the UNDCP watch list, especially ephedrine and potassium permanganate, which are
produced and exported in large quantities. China also appears to be the source of "Black Pearls," round,
black pills which contain varying amounts of the internationally controlled psychotropic
benzodiazepine, diazepam. The pills are sold as Chinese herbal medicine and are believed to be reaching
the US via Hong Kong.
Drug Flow/Transit. Heroin from the Golden Triangle transits China in quantities which USG experts
believe significantly affect the United States. Chinese officials note that more than 90 percent of the
heroin that flows through China comes from Burma. The 2000-kilometer border that China shares with
Burma is considered China's friendliest. In recent years, as Chinese officials have encouraged trade with
Burma, this porous border area has become the principal entry point for the vast majority of drugs
entering China. The Chinese Government has urged Burmese officials to curtail the drug flow. In July,
Vice Minister of Public Security Bai Jingfu visited Burma and pledged cooperation in helping the
Burmese fight narcotics production. China has also voiced its support for international programs aimed
at weaning Burmese farmers away from drug cultivation.
Domestic Programs. China has begun to institute anti-drug education programs in its school system
following recognition that a large portion of drug users are juveniles. The government also tried to
strengthen drug awareness by disseminating information via the media. In 1997, the Chinese press
frequently featured stories on drug prevention. China has also created more drug treatment and
rehabilitation centers. There are now more than 610 such facilities in the country. There are also some
75 drug treatment centers at "re-education through labor" facilities. The Ministry of Health pursues the
integration of customary detoxification methods with traditional medicines, acupuncture, and other
Chinese-developed treatments. It has also sought assistance from foreign countries in developing
rehabilitation programs. The most common method of quitting drugs, however, is still "cold turkey."
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Anecdotal evidence suggests that the official figure of 520,000 addicts significantly underestimates the
magnitude of drug abuse in China. The Chinese Government has not revised its 1995 figure on the
number of registered drug addicts in the country. Officials say that the number will likely be adjusted in
1998. Chinese health officials acknowledge that most drug abusers do not seek treatment and are not
discovered by law enforcement officials.
IV. US Policy Initiatives and Programs
Policy Initiatives. The US Government continues to: 1) seek a closer dialogue with China on the
international and regional dimensions of the narcotics problem; 2) encourage the exchange of
information with Chinese counternarcotics officials on international trafficking networks and narcoticsrelated cases, with the aim of increasing our mutual interdiction capacity; and 3) encourage regional
cooperation and counternarcotics projects.
Bilateral Cooperation. Bilateral drug enforcement cooperation improved in 1997. In April, the Chinese
Government agreed to a USG request to transfer the Burmese drug fugitive Li Chia-cheng, who had
been detained in Yunnan Province, to the United States to stand trial. During the October Summit
between Presidents Clinton and Jiang, the United States and China agreed to open reciprocal drug
enforcement offices in each other's capitals. This should further enhance information sharing and law
enforcement cooperation between the two countries. China has also agreed to establish a real-time email link with Washington to exchange information more rapidly on drug trafficking and traffickers.
In 1997, Chinese officials continued to participate in INL- or DEA- funded seminars and training
programs. In August, China hosted two DEA seminars on chemical control. China also sent law
enforcement officials to the United States to take part in airport interdiction training programs. In 1997,
working-level Chinese law enforcement officials continued to exchange information on international
drug trafficking cases with USG law enforcement officials.
The Road Ahead. With the October agreement to establish reciprocal drug enforcement offices, further
close cooperation is expected between the United States and China in 1998. The October 1997
Presidential Summit also produced agreement to establish a joint liaison group on law enforcement and
specifically included narcotics trafficking as one of the issues to be addressed. U.S-Chinese adherence to
these agreements will send a strong signal about mutual commitment to resisting the inroads the drug
trade and transnational criminal organizations have made in both Chinese and American societies.
Click here for China table
HONG KONG
I. Summary
The Hong Kong Special Administrative Region (HKSAR) continues to focus its attention on both
money laundering and the transshipment of drugs. In 1997, Hong Kong conducted an interagency
review of all laws and practices related to money laundering, which resulted in strengthened money
laundering guidelines for Hong Kong financial institutions, securities firms, and the insurance sector.
The reversion of Hong Kong to the sovereignty of the People's Republic of China on July 1, 1997,
necessitated a number of actions to establish a new framework, both domestic and international, to
address law enforcement cooperation. The HKSAR passed enabling legislation to implement extradition
and mutual legal assistance agreements with other countries. The US- Hong Kong Extradition
Agreement entered into force in January 1998. The new US-Hong Kong Mutual Legal Assistance
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Agreement is awaiting Senate action. With Hong Kong's reversion to Chinese sovereignty, the 1988
United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances has
for the first time been made applicable to Hong Kong.
II. Status
Hong Kong's role as a major financial center makes it vulnerable to the illicit use of its financial
institutions for laundering drug-related proceeds. Similarly, Hong Kong's geographical location and its
large and active port make possible the illegal transshipment of containerized narcotics to the US and
other markets.
III. Country Action Against Drugs in 1997
Policy Initiatives. Key initiatives undertaken by the Hong Kong SAR in 1997 included the passage of
several pieces of enabling legislation, which laid the groundwork for post-reversion law enforcement
cooperation with other countries on extraditions (the Fugitive Offenders Ordinance) and criminal
investigations (the Mutual Legal Assistance in Criminal Matters Ordinance). Hong Kong also enacted
the 1997 Drug Trafficking Order, which allows for the enforcement of confiscation orders made in
countries that are signatories to the 1988 UN Drug Convention and is designed to enhance Hong Kong's
ability to recover the proceeds of drug trafficking. In addition, Hong Kong amended the Dangerous
Drugs Ordinance, providing for the imposition of heavier sentences for adults who exploit persons under
the age of 18 in illegal drugs trade.
Hong Kong made further progress with the anti-drug initiatives which were adopted during the local
"summit" meetings on drugs held in 1995 and 1996. A total of 125 initiatives have been put forward in
the course of the two summits, and 118 of these initiatives--95 percent--have been met.
Hong Kong also conducted a review in 1997 of its "Beat Drugs Fund," which was established to fund
counternarcotics initiatives by voluntary agencies. This review resulted in the tightening of the vetting
mechanism for applications, a decision to provide briefing sessions for applicants, and the establishment
of a monitoring mechanism to ensure that grants are used for their intended purposes. Hong Kong is also
reviewing the Drug Addicts Treatment and Rehabilitation Ordinance, which oversees the establishment
of centers for treatment and rehabilitation of drug abusers.
As part of its efforts to meet the goals and objectives of the 1988 UN Drug Convention, Hong Kong
amended Schedules I and II of the Control of Chemicals Ordinance to place the salts of 17 chemicals
under licensing control. Also as part of its precursor chemical control efforts, Hong Kong follows the
recommendations in the 1988 Convention for issuing pre-export notifications to destination countries of
precursor chemical shipments so that their international movements can be monitored for diversion.
Accomplishments. In 1997, Hong Kong stopped three suspicious chemical shipments, a success that
was noted in reports issued by the International Narcotics Control Board.
Law Enforcement Efforts. Hong Kong has over 900 law enforcement officers in the Customs and
Excise Department and police force dedicated to full-time drug enforcement. No major restructuring of
these personnel took place during 1997. The Police Narcotics Bureau has set up specific teams for
liaison with counterparts in different regions of the world and teams which are specifically tasked to
concentrate on a particular drug, such as the drug "ecstasy". Due to the increased popularity and use of
"ecstasy" among Hong Kong's youth, Hong Kong authorities stepped up their law enforcement
measures, resulting in a significant increase in tablet seizures. Close cooperation between Hong Kong
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law enforcement agencies and the Public Security Bureau of Guangdong Province resulted in a
substantial quantity of heroin seized in the mainland which would otherwise have entered Hong Kong.
Through October 1997, Hong Kong narcotics officers had seized 157.9 kilograms of heroin, 1.456
kilograms of raw opium, 2.494 kilograms of prepared opium, 106 kilograms of cannabis, 32 kilograms
of cocaine, 62.7 kilograms of "ice," and 43,064 methamphetamine tablets. Through November, 9,525
persons were convicted of drug-related offenses.
Corruption. There is no known narcotics-related corruption among senior government or law
enforcement officials in Hong Kong. Hong Kong has a comprehensive Anti-Corruption Ordinance that
is effectively enforced by an Independent Commission Against Corruption that reports directly to the
Chief Executive.
Agreements and Treaties. A network of international agreements helps Hong Kong achieve its
counternarcotics goals. At present, Hong Kong's Customs and Excise Department has entered into
cooperative arrangements with customs authorities in the United States, the United Kingdom, Canada,
Australia, New Zealand, Belgium, France, India, and Korea. Hong Kong has signed bilateral mutual
legal assistance agreements with the United States, Australia, and France, and has initialled agreements
with Switzerland, New Zealand, and the Philippines. Extradition agreements have been signed with the
United States, Australia, the Netherlands, Canada, Malaysia, Indonesia, India, the Philippines,
Singapore, and the United Kingdom and one has been initialled with New Zealand.
The US-Hong Kong Extradition Agreement--signed by both parties on December 20, 1996--was ratified
by the US in November 1997 and came into force in January 1998. The bilateral Mutual Legal
Assistance Agreement was signed on April 15, 1997 and awaits advice and consent to ratification by the
US Senate.
Hong Kong continues to maintain close links with the United Nations, the World Health Organization,
the Financial Action Task Force, Interpol, and the World Customs Organization. Hong Kong has
welcomed the second review of its system by the Financial Action Task Force, which will take place in
the spring of 1998. As part of the preparations for this exchange, Hong Kong has carefully reviewed its
existing body of narcotics-related laws and practices.
Drug Flow/Transit. US counternarcotics officials believe that Hong Kong traffickers control large
portions of Southeast Asian narcotics traffic, arranging both the financing and shipment of narcotics
through Asian ports, including Hong Kong. The bulk of heroin seized in Hong Kong in 1997, however,
appeared destined for the local market. In 1997, there were no heroin seizures in Hong Kong that
appeared destined for the US market and no major seizures in the US either originated or transitted
Hong Kong.
There are signs that the direct importation of cocaine by Hong Kong traffickers from South America
may be on the rise; through October, Hong Kong authorities seized 32 kilograms of cocaine, double the
15.8 kilograms seized in 1996. Most of the couriers arrested at Hong Kong's airport continue to be from
Latin America.
Hong Kong is a source/transshipment point for precursor chemicals such as ephedrine and
pseudoephedrine, one of the precursor chemicals used in the production of methamphetamines. There
are numerous chemical supply outlets in Hong Kong capable of supplying multi-ton quantities of these
chemicals.
Domestic Programs. Hong Kong has in place an active preventive public education program designed
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to discourage drug use, especially among the young. Part of the annual "Beat Drugs Fund" allocation
goes to preventive education. Of the 1997 USD 1.5 million allotment, approximately USD 350,000 was
allocated for preventive education and publicity projects; an additional USD 1.17 million went towards
treatment and rehabilitation services.
Hong Kong's anti-drug preventive education and publicity programs in 1997 included efforts to:
educate young persons that there is no difference between "hard" and "soft" drugs in terms of harmful
effects, and to better equip them with refusal skills;
alert parents to the importance of strengthening parent- child relationships and the role that they can play
to steer their children away from drugs; and encourage people, particularly younger people, to adopt a
drug-free life style, and to point out that whatever their problems may be, there are alternatives to drugs.
In the first ten months of 1997, a special team within the Narcotics Division visited over 330 primary
and secondary schools and technical institutes to provide preventive education talks that reached over
56,000 students. The Education Department supplements these talks by involving parents and students
in anti-drug projects; in February, Education Department officials hosted an international conference on
drug education in schools. Three new public service announcements were broadcast to promote an antidrug culture among young people. In addition, 23 district anti-drug campaigns were organized by
district "Fight Crime" committees.
IV. US Policy Initiatives and Programs
US Policy Initiatives. The USG stresses joint investigations with Hong Kong law enforcement officials
to develop prosecutable cases--either in Hong Kong or in the US-- against major Hong Kong-based
traffickers. In the coming year, US Drug Enforcement Administration (DEA) personnel will assist the
Hong Kong Customs and Excise Department with the further development of Hong Kong's chemical
control program and work with Hong Kong to identify and monitor suspicious container shipments as
part of a continuing effort to maintain the high degree of support in the area of precursor chemical
control enforcement, monitoring, and legislation. USG officials will continue to encourage Hong Kong
authorities to strengthen their laws governing money laundering and asset forfeiture.
Bilateral Cooperation. Hong Kong and USG investigators cooperated on several international narcotics
investigations in 1997, resulting in a number of arrests and drug seizures. In two drug-related financial
investigations, the Hong Kong Customs and Excise Department facilitated the forfeiture of USD 1.8
million and the Hong Kong Police provided assistance which led to the restraining of USD 2.1 million
in Hong Kong.
In August, US, Hong Kong, and Mexican authorities coordinated a controlled delivery to Mexico of
approximately 150 kilograms of pseudoephedrine which originated in China. Mexican authorities seized
the shipment, and the investigation is continuing.
Hong Kong Customs and Excise authorities provided two instructors to assist DEA's diversion training
team in conducting two one-week seminars in China. Hong Kong Customs and Excise and Hong Kong
Police Narcotics Bureau officials accompanied US investigators to the annual Asian Organized Crime
Conference in Florida and to the International Crime Conference in Hawaii. DEA sponsored several
Hong Kong Customs and Excise officials attending international chemical control conferences in
Prague, Vienna, and Lisbon. Local DEA officers continue to provide monthly briefings at the Hong
Kong Police Command School.
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The Road Ahead. The USG will continue to encourage Hong Kong to play an active role on narcotics
and money laundering issues consistent with its international stature. In practical terms, this means: 1)
improving the enforcement and implementation of existing laws and guidelines, especially regarding
money changers and remittance agents; 2) increasing police funding and staffing for the aforementioned,
as the police are now tasked with this function; 3) enhancing the legal framework to include tighter
company registration procedures to discourage "shell" companies (especially off-shore corporations); 4)
requiring reporting of transactions exceeding specified amounts and putting in place "structuring"
provisions to counter evasion efforts; and 5) establishing and enforcing currency entry/exit reporting
requirements. The US will also continue its emphasis on the chemical control program, in particular,
regarding precursor chemicals.
See Hong Kong tables
INDONESIA
I. Summary
While Indonesia is not a major producer of narcotics or a narcotics-derived money laundering center, it
is increasingly used as a transit point for Southeast Asian heroin destined for Australia, the United
States, and Europe. While drug shipments via Indonesia do not currently appear to affect the US
significantly, Indonesia's attractiveness to drug traffickers has grown as interdiction efforts in the rest of
the region have become more sophisticated and more effective, while border controls in Indonesia have
remained weak. Increases in tourism and international trade, with the corresponding growth of air and
shipping traffic through Indonesia, also contribute to this trend. Indonesia's criminal code does not
include controls on money laundering. These factors, along with pervasive corruption and lack of
professionalism among police and customs officials, impede law enforcement efforts. Indonesian law
enforcement authorities have a good working relationship with the United States Drug Enforcement
Administration (DEA), the United States Customs Service and the State Department Bureau of
Diplomatic Security's regional security officer. In 1997, the Indonesian Parliament ratified the 1988 UN
Drug Convention and also passed new anti-narcotics laws which conform to international norms
established by that Convention.
II. Status of Country
The production, sale and consumption of "ecstasy" have become major problems, notably in urban areas
such as Jakarta. International trafficking in the drug is also growing rapidly, though much of this entails
smuggling of the drug into Indonesia, especially from Western Europe. Marijuana is produced in remote
areas of Northern Sumatra (Aceh), primarily for domestic consumption. There is no accurate estimate of
the amount of land committed to marijuana production.
In recent years Indonesian authorities have focused increasingly on the elimination of consumption of
and trafficking in "ecstasy". Official anti-narcotics concern over designer drugs, notably "ecstasy," has
eclipsed government concern with more traditional narcotics (marijuana). 1997 also saw the continued
expansion of heroin trafficking networks through Indonesia with Southeast Asian, South Asian and
Nigerian connections. Target countries included the United States, Australia and West European states.
In November 1997, police in Jakarta shot to death a Nigerian allegedly involved in the smuggling of six
kilograms of heroin. According to the Indonesian police, a total of seven other Nigerians were arrested
in November for heroin smuggling. The press reported numerous other arrests for heroin trafficking
during the year, an indication of Indonesia's growing role as a heroin trafficking center. Arrests in
neighboring countries of couriers bound for Jakarta provided further evidence of the increasing
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utilization of Indonesia as a transit point for heroin moving westward.
III. Country Actions Against Drugs in 1997
Policy Initiatives. In January 1997, the Indonesian Parliament ratified the 1988 UN Drug Convention.
The Indonesian Parliament has also approved legislation outlawing psychotropic drugs, including
"ecstasy," and providing for penalties of up to seven years imprisonment for marijuana possession and a
maximum of 20 years in jail for marijuana trafficking. In September, the Parliament passed new antidrug legislation which replaced the previous 1976 law. The new legislation conforms to the criteria set
forth in the 1988 UN Drug Convention.
Accomplishments/Law Enforcement Efforts. During 1997, police continued frequent raids on night
clubs and other likely venues for the sale and consumption of designer drugs and other illicit narcotics.
Elimination of the sale, transport and financing of narcotics remained a stated objective of anti-narcotics
activities by the authorities, particularly vis-a-vis the domestic market. Asset seizure in drug cases is not
widely practiced in Indonesia but is now permitted by the new 1997 legislation. Arrests of narcotics
traffickers were reported frequently in Jakarta and the Kuta Beach area of Bali. Arrests of foreigners in
connection with narcotics use, possession and trafficking was frequently noted in the Indonesian media.
Corruption. There are many indications that police officials themselves are involved in drug trafficking
in Indonesia. In addition to reports from street sources that police authorities are assisting "ecstasy"
traffickers, on several occasions in 1997 military and police personnel were arrested for involvement in
narcotics-related activities. There were also reports that persons arrested for narcotics trafficking could
easily bribe police to permit them to "escape." One such case, reported in the press, involved a South
African citizen arrested in January. Following his escape from police custody in February, ten policemen
were under investigation.
Agreements and Treaties. While there is no formal extradition relationship between the United States
and Indonesia, in practice US and Indonesian authorities have cooperated effectively in resolving
narcotics-related criminal cases. Indonesia is a party to the 1961 UN Single Convention and its 1972
Protocol and the 1971 UN Convention on Psychotropic Substances and has ratified the 1988 UN Drug
Convention. Indonesia is also a party to the World Customs Organization's International Convention on
Mutual Administrative Assistance for the Prevention, Investigation and Repression of Customs
Offences' "Nairobi Convention" Annex X on assistance in narcotics cases.
Cultivation and Production. As their limited resources permit, the Indonesian National Police, in
particular the Narcotics Unit, and Indonesian Customs continue their efforts to combat narcotics
smuggling. There is no confirmed information on the amount of acreage under marijuana cultivation in
Indonesia. As in previous years, however, the illicit cultivation of marijuana in Aceh Province is the
target of periodic eradication campaigns. According to press reports, in April of 1997 police discovered
a large cannabis plantation in Bandar Aceh and arrested 13 individuals. Three more plantations in the
Aceh area were reportedly raided in September.
Drug Flow/Transit. As anti-trafficking efforts by governments in the region grow in sophistication,
there has been a tendency, noted in previous INCSRs, for traffickers from the region, South Asia and
Nigeria to look to Indonesia, where border controls remain relatively lax and officials are easily bribed.
Rapid growth in tourism, shipping and air traffic accompanying Indonesia's rapid development has
expanded the potential Indonesia offers as an illicit narcotic transit point. Reports in local language
newspapers also indicate increased heroin use among young Indonesians, however, indicating some
diversion of trafficked heroin to local use.
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Domestic Programs. Increased police targeting of domestic users, supported by regular press coverage
of interdiction activities, has reflected the government and the public's growing concern about domestic
consumption patterns. It is not clear, however, whether the increased number of narcotics arrests
reported in the press actually reflects increased police effectiveness in countering drug trafficking, or
merely an awareness that from a public relations standpoint the police at least need to appear to be
addressing the problem. Demand reduction is a growing concern in Indonesia as the use of "ecstasy,"
particularly among Indonesia's young urban elite, mushrooms.
IV. US Policy Initiatives and Programs
Policy Initiatives. The US Embassy in Jakarta and the DEA and Customs Attaches in Singapore
coordinate cooperation with the Indonesian Government on narcotics matters. (The DEA office in
Jakarta was closed in 1987 and there is no resident Customs Attache at Embassy Jakarta.) The USG
particularly supports the adoption of anti-money laundering legislation.
Bilateral Cooperation. In 1997, DEA funded the participation of two Indonesian narcotics officers at
the Asian Regional Drug Enforcement Seminar in Singapore.
DEA Singapore sponsored a ten-day narcotics enforcement training course in Jakarta which was
attended by officials from the Indonesian National Police, Customs Office, Department of Health,
Attorney General's Office, and Immigration Office.
US Customs continued to work with Indonesian Customs officials on the development of computer data
bases to assist in the tracking of foreign yachts through the archipelago.
During 1997, the Government of Indonesia continued to cooperate with the DEA on narcotics cases
involving the arrest of US citizen drug traffickers in Indonesia. In one noteworthy case, an agreement
was reached with the Indonesian authorities to share proceeds from confiscated drug trafficker assets.
JAPAN
I. Summary
The illegal drug of choice in Japan is overwhelmingly methamphetamine. According to National Police
Agency (NPA) officials, approximately 94 percent of all drug offenses in Japan involve violation of the
Stimulant (methamphetamine) Control Law. Other abused drugs in Japan, in descending order, are
marijuana, cocaine, heroin, opium, and MDMA ("ecstasy"). Drug use among juveniles has risen rapidly
in recent years. Japan is not a major producer of drugs. Nearly all are smuggled in from foreign sources.
Japan produces many precursor chemicals, all of which also have legitimate industrial uses.
Japan criminalizes only drug money laundering. USG law enforcement officers report that drug and
money laundering investigations initiated in the US periodically show a link between drug-related
money laundering activities in the US and bank accounts in Japan. The extent of such activity is,
however, unknown.
II. Status of Country
Japan is not, and is unlikely to become, a significant producer of narcotics. However, there is a growing
user market in Japan, especially among juveniles, and increased trafficking activity within the illegal
immigrant population. Narcotics trafficking in Japan is a source of income for Japanese organized crime.
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Organized crime members sometimes try to sell their product overseas, including in the US The FBI and
other USG law enforcement offices coordinate closely with the NPA in trying to prevent this activity.
Japan is suspected of being a major money laundering center, and police believe criminal organizations
are behind much of the drug trafficking and money laundering in Japan. Laws criminalizing drug-related
money laundering and authorizing execution of controlled drug deliveries were enacted in 1992.
Although the 1992 law also authorizes the reporting of suspicious transactions by Japanese financial
institutions, such reporting rarely occurs.
III. Country Actions Against Drugs in 1997
Policy Initiatives. An amended foreign exchange control law, which takes effect in 1998, will require
travelers entering and departing Japan to report to customs authorities physically transported currency
and monetary instruments. All currencies will be reportable under the new legislation. The threshhold
reporting amount has not yet been established.
Accomplishments. In 1997, Japan continued its sponsorship of many annual international drug
enforcement and prevention programs, including the Asia-Pacific Operational Drug Enforcement
Conference, a seminar on control of drug offenses, and a training course on drug prevention activities.
Japan is also an active participant in all major conferences conducted throughout the world each year
which concern narcotics trafficking and related crimes. Japan is also an active member of the UNDCP
Major Donors Group, and finances and participates in many UNDCP programs.
Law Enforcement Efforts. Police anti-narcotics efforts tend to focus on Japanese organized crime
groups, the main smugglers and distributors of drugs. However, police and prosecutors have been
hesitant to pursue cases in which a conviction is not almost certain prior to trial. In addition to
smuggling and distribution activities, law enforcement officials are paying increased attention to drugrelated financial crimes.
1992 legislation created a system to confiscate illegal profits gained through drug crimes, criminalized
money laundering, and authorized execution of controlled narcotics deliveries. Seizure provisions apply
to tangible and intangible assets, direct illegal profit, substitute assets, and criminally derived property
commingled with legitimate assets. Although statutorily authorized, seizure power has seldom been
used. Japan has not established a forfeiture fund into which proceeds of assets forfeited to the
government could be channeled for law enforcement or other official uses.
Corruption. Japan has no known drug-related corruption.
Agreements and Treaties. Japan is a party to the 1988 UN Drug Convention, and participates in the
Financial Action Task Force (FATF) and Asia Pacific FATF. Japan presented its formal response to the
second round of FATF mutual evaluations in December 1997. The US and Japan have cooperated in
extradition matters since the bilateral Extradition Treaty took effect in 1980.
Japan has no narcotics-specific bilateral agreements with the US or any other country. US Customs and
FBI representatives report that cooperation on an informal basis is generally good. The lack of a
mechanism for compulsory international cooperation hurts Japanese and foreign law enforcement efforts
to investigate crimes with a nexus in Japan. Although Japanese authorities respond to formal requests
for investigative assistance sent under cover of diplomatic notes, the processing of such requests is slow
and time consuming. The USG and Japan are engaged in discussions concerning negotiation of a Mutual
Legal Assistance Treaty (MLAT).
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At the Denver Summit in June 1997, customs administrators from Japan and the US signed a Customs
Mutual Assistance Agreement (CMAA), which will cement and further enhance the already excellent
cooperation existing between the US and Japan on inquiries into suspected customs violations. This is
Japan's first CMAA.
Cultivation/Production. Although not a significant cultivator or producer of controlled substances,
Japan is a major producer of 60 types of precursor chemicals, all of which have legitimate industrial
uses. Japan is one of only a handful of countries that produce ephedrine, which is used to create
antihistamines, but is also an essential ingredient in methamphetamine. Japan is a member of the
Chemical Action Task Force, and DEA reports Japan is conscientious about monitoring end users of
precursors.
Drug Flow/Transit. Arrests of foreigners for violating drug-related laws are increasing. Filipinos,
Iranians, South Koreans, and Thais are the major nationalities represented, although recently large
numbers of West African nationals, primarily Nigerians, have joined this group. Almost all drugs
illicitly trafficked in Japan are smuggled from overseas. According to the NPA, China and Thailand are
the principal overseas sources. In May 1997, Japanese police seized 50-70 kilos of stimulant drugs that
were smuggled into the country on a North Korean vessel.
Domestic Programs. Domestic demand is rising, especially among minors. According to police
statistics from January to June 1997, abuse by minors of stimulants was up 26 percent from the same
period in 1996. Most middle and high schools do not have drug education programs. Drug treatment
programs are small and generally run by private organizations.
IV. US Policy Initiatives and Programs
Policy Initiatives. The USG seeks negotiation and conclusion of an MLAT as one means of
strengthening cooperation on counternarcotics and other law enforcement issues and is urging the
opening of formal negotiations. In October 1997, DEA representatives met with members of the NPA's
Drug Enforcement Division, the Ministry of Finance's Customs and Tariff Bureau, the Ministry of
Health and Welfare's Narcotics Bureau, and the Ministry of International Trade and Industry's
International Chemical Weapon and Drug Control Policy Office to discuss chemical control and
diversion initiatives.
Bilateral Cooperation. Japanese cooperation with the United States on law enforcement matters is
informal, but generally good. The Japanese cooperate fully with regard to USG fugitive transit requests.
The Road Ahead. A comprehensive crime bill, although aimed primarily at curtailing the activities of
organized crime groups, is under active consideration and would significantly alter the current situation
in Japan with respect to money laundering. Among the provisions contained in the crime package are: 1)
authority to conduct legal wiretaps; 2) an expanded definition of money laundering which would add
approximately 200 offenses, including non-drug related offenses; and 3) authority to establish a financial
investigative unit to collect and analyze information on financial crimes. Domestic debate on the crime
bill has focused on political opposition to the wiretapping proposals contained in the bill. The US
believes passage of this legislation will lessen Japan's vulnerability to money laundering abuses.
The USG also hopes that Japan, as the chair of the UNDCP Major Donors Group, will make every effort
to provide strong financial, as well as moral, leadership and support to UNDCP and other international
counter narcotics efforts.
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LAOS
I. Summary
Laos remains the world's third largest producer of illicit opium, behind Burma and Afghanistan. For the
1997 growing season, the US estimated Laos' potential production at 210 metric tons, up 5 percent from
the year before. Cultivation increased by 12 percent, with most of the increase in the northwest of the
country. In crop substitution project areas funded by foreign donors, however, opium cultivation
remained low. In May, Lao authorities seized 62.3 kilograms of heroin in Luang Prabang Province, the
largest single seizure ever in Laos. In September, Laos ratified the 1971 UN Convention on
Psychotropic Substances. Lao officials have indicated that the 1988 UN Convention may be ratified in
1998, after the necessary legislation has been passed. Laos has agreed to implement a US-funded
eradication project, focusing first on areas that have received counternarcotics-related development
assistance. The first Drug Enforcement Administration (DEA) agent permanently assigned to Laos is
expected to arrive in early 1998. Laos has also emerged as an increasingly active player in regional
counternarcotics efforts and has been selected to serve a four-year term on the UN Commission on
Narcotic Drugs, beginning in January 1998.
II. Status of Country
Laos remains the third largest producer of illicit opium in the world. Lao opium is grown almost entirely
by small-scale subsistence farmers, without fertilizers, irrigation, or other agricultural improvements.
USG support for rural development crop control programs recognizes the importance of changing Lao
farming practices before an improving economy or organization of opium cultivation by criminal
syndicates boosts yields and overall production.
Laos' location next to the world's largest producer of opium and heroin, Burma, and its land borders with
countries that combine important opium markets and ports on trade routes to Europe and America
(China, Thailand, Vietnam, and Cambodia), make it an important route for drug trafficking. Without
sufficient donor assistance to help it build the institutions necessary to effectively combat narcotics
production and trafficking, Laos' strategic importance to the drug trade can only increase as its physical
and communications infrastructure improves.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The Government of Laos' (GOL) Counternarcotics Master Plan was developed with
UNDCP assistance in 1993 and is directed at addressing all aspects of the drug problem in Laos. The
Plan is ambitious; full and effective implementation will require foreign donor funding. Specific goals
include: reduction of opium production to less than 70 metric tons (estimated internal consumption) by
the year 2000; no further increase in opium addiction between 1996 and 2000; comprehensive drug
legislation adopted between 1996 and 2000; and ratification of the 1988 UN Drug Convention (the 1971
Convention having been acceded to in 1997) between 1996 and 2000. Increased Lao commitment and
international support are both necessary to achieve these goals. The GOL is seeking donors for two still
unfunded crop control projects in its two most important opium producing provinces, Oudomxai and
Phongsali. UNDCP continues to work closely with the GOL to carry out Master Plan goals.
Accomplishments. In September 1997, the GOL ratified the 1971 UN Convention on Psychotropic
Substances, an important step toward compliance with the objectives of the 1988 UN Drug
Convention. In May 1997, police officers arrested 21 suspects and seized 62.3 kilograms of heroin and
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74,000 amphetamine tablets in Luang Prabang Province. This was the largest heroin seizure since the
beginning of US-Lao counternarcotics cooperation. The first forensic lab in Laos able to test confiscated
drugs opened in Vientiane in 1997. Lab equipment and training were funded by UNDCP.
In July 1997, the GOL hosted a trilateral ministerial meeting with Burma and Thailand to address
problems of illicit drug production and trafficking. The GOL and UNDCP signed an agreement for a
new $4.8 million alternative development and crop control project in Nong Het District of Xieng
Khouang Province, an important opium producing region. UNDP, FAO, WHO, UNICEF and other UN
agencies will participate. A three-year extension of the UNDCP-funded crop control project in Luang
Namtha and Bokeo Provinces was also signed. The GOL also signed bilateral counternarcotics
cooperation agreements with Burma and the Philippines.
Law Enforcement Efforts. The INL-funded counternarcotics units (CNU) in Vientiane, Savannakhet,
and Bokeo, along with other provincial police offices, reported the successful completion of 95 cases in
1997, resulting in the arrest of 233 suspects, including 12 foreign nationals. These cases involved
seizures totalling 72.3 kilograms of heroin, 200 kgs of opium, 750,700 methamphetamine tablets, 263.6
kgs of processed marijuana, and 3.8 metric tons of dried marijuana. Increases in heroin and
methamphetamine seizures were significant, with heroin seizures seven times the 1996 figure. Lao law
enforcement officials also seized 18 motorcycles, 13 four-wheeled vehicles, cash, weapons, and
marijuana processing equipment. By the beginning of the November/December eradication season,
authorities had destroyed 18 tons of cannabis under cultivation in southern Laos.
Investigation into the Luang Prabang heroin case continues in several other provinces. While
information from INL-supported CNUs contributed to the early arrests and seizures, the Ministry of
Interior has taken direct control of the expanding case. This is the most complex trafficking case the Lao
have dealt with to date.
Corruption. Given Laos' poverty and the very low salaries of Lao government employees, it is assumed
that some officials and military personnel receive rewards from illicit drug trafficking. It is also possible
that some officials, including at relatively senior levels, are aware of or involved in these narcoticsrelated activities. The GOL per se, however, does not encourage or facilitate the production or
distribution of illicit drugs. Government officials have been punished for corruption, including
specifically narcotics-related corruption.
Agreements and Treaties. The US and Lao Governments signed a Memorandum of Understanding
(MOU) on counternarcotics cooperation in 1989. Bilateral crop control agreements have been signed
annually since 1989, as have bilateral law enforcement project agreements since 1992. Both countries
have expressed their intention to continue and expand this cooperation. In 1997, the US and Lao
Governments agreed to extend their crop control agreement to include information gathering and
eradication activities, as one way of enforcing the 1996 law banning opium production. Crop control and
alternative development activities were also extended to a small project in Oudomxai Province.
Although the Government of Laos does not have a mutual legal assistance or extradition treaty with the
United States, it has agreed informally to cooperate in deporting drug traffickers. Laos is also signatory
to an MOU on regional counternarcotics cooperation with UNDCP and China, Burma, Thailand,
Vietnam and Cambodia. Laos acceded to the 1971 UN Convention on Psychotropic Substances in 1997
and is working with UNDCP to pass legislation necessary to bring it into compliance with the 1988
Drug Convention. UNDCP expects Laos to ratify the 1988 UN Drug Convention in 1998.
Cultivation/Production. Opium is produced in the ten northern provinces of Laos as a cash or barter
crop - for food security reasons - and as a traditional medicine. The extreme isolation of most opium
producing communities makes opium a vital crop on both counts. 1997 USG crop estimates indicate a
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12 percent increase in cultivation to 28,150 hectares, and a 5 percent increase in potential production to
210 metric tons. The lesser increase in potential production came from a decrease in the baseline figure
used to calculate yields from 8.0 to 7.5 kilograms per hectare. This was based on a small-scale yield
survey conducted by USG personnel in February 1997; yield estimates in previous years had been based
on regional rather than Lao-specific data. UNDCP plans a much more comprehensive yield survey,
using USG-developed survey methodology, for the coming opium season. This will help to further
refine yield estimates. The most significant increases in cultivation were observed in northwest Laos,
where counternarcotics crop control efforts are new or non-existent. The GOL is actively seeking donor
assistance for these areas. Cultivation in northeastern Laos, where past crop control efforts have been
concentrated, remained constant or fell slightly.
Drug Flow/Transit. The GOL's ability to control the flow of narcotics within and across its lengthy,
porous borders is severely limited by lack of personnel, resources, expertise, and ready access to many
isolated areas of the country. Effective control over borders with Thailand, Burma, China, Vietnam, and
Cambodia exists only in the vicinity of major population areas, along principal land routes, and at
established river crossings. The dramatic increase in amphetamine seizures in 1997 corresponds with the
expansion of amphetamine consumption in Thailand. Heroin seizures were also up, mostly due to the
Luang Prabang case. As roads are upgraded, and as interdiction efforts on Burma's borders with China
and Thailand increase, Laos can expect to become an even more popular route for illicit drug flows.
Domestic Programs. Opium addiction is the main drug use problem in Laos, but is overwhelmingly a
rural phenomenon in the north of the country. Most addicts are believed to have begun using opium for
medical reasons. The 1996 UNDCP survey of opium production and use estimated an addict population
of approximately 35,000, down from an estimated 42,000 in 1993. UNDCP attributed the drop to the
higher price of opium. The Lao Government has put increasing emphasis on detoxification programs for
addicts. The location of most addicts in remote, often inaccessible rural areas increases the cost and
difficulty of treatment. A USG-funded UNHCR detoxification program for repatriated Lao refugees
begun in 1997 in Luang Prabang Province is providing model procedures for use elsewhere. Several
detoxification sessions were conducted at hospitals in the USG-funded crop control project area in
Houaphanh Province. In May 1997, Daytop International conducted a second INL-funded drug
treatment workshop for health care workers. Four more sessions are planned.
IV. US Policy Initiatives and Programs
Policy Initiatives. The USG focuses on helping the GOL achieve two primary counternarcotics
objectives: elimination of opium poppy cultivation, and suppression of illicit trafficking of narcotics and
precursor chemicals. Crop control projects, as in Houaphanh Province, are one method of addressing the
first goal. The USG works closely with UNDCP and with other donors of development assistance to
ensure that counternarcotics objectives are included in all rural development programs in northern Laos.
Trafficking suppression is pursued through support of special counternarcotics police units, and through
support of Lao Customs. Additional support has been provided to the Lao National Commission for
Drug Control and Supervision (LCDC), which has overall policy direction for anti-narcotics activities
under the Office of the Prime Minister.
Bilateral Cooperation. In 1997, the USG and GOL agreed to begin the first stage of an anticipated crop
control project in Oudomxai Province. An expansion of the Houaphanh crop control project is also
being discussed. The GOL has agreed to a first-time eradication program in areas that have received
counternarcotics development assistance. Implementation will begin in 1998. In response to a GOL
request, the USG will help establish seven more counternarcotics units in key cities over the next few
years. The US Customs Service conducted a second train-the-trainer course for Lao police and customs
officers in May 1997. The first permanently assigned DEA agent is expected to arrive in Vientiane in
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early 1998. In the meantime, DEA/Udorn is providing support on a weekly basis and developing close
relationships with the Vientiane Counternarcotics Office and with senior Ministry of Interior officials.
The Road Ahead. In January 1998, the GOL will begin a four-year term as a member of the UN
Commission on Narcotic Drugs, which oversees UNDCP. The GOL has made clear that it is committed
to achieving the counternarcotics objectives in its Master Plan. If it is to do so, it must change the
practices of Lao farmers and upgrade its law enforcement capabilities before the inevitable
modernization of Laos' society and economy exacerbates the problems of narcotics production and
trafficking. The USG is committed to assisting Laos in this effort, and will offer continued support to
alternative development projects, with particular emphasis on cooperation with other donors. The
permanent presence of DEA and larger numbers of specialized counternarcotics law enforcement units,
which the USG proposes to help fund, will aid Laos in the development of its interdiction capacity. The
USG's commitment to Laos is made both in response to the determination shown by the GOL and in
recognition of the fact that, given the continuing poverty and development challenges Laos faces, it is
unlikely to achieve its counternarcotics objectives on its own.
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EUROPE AND CENTRAL ASIA
ALBANIA
I. Summary
Narcotics trafficking, cultivation, and use, and money laundering are all long-standing, but increasingly
serious problems in Albania. Widespread unrest and violence early in 1997 and lack of effective border
controls exacerbated illegal drug activity. Efforts to restore order and to strengthen counternarcotics
efforts toward the end of 1997 have yielded some seizures, but have not brought narcotics trafficking
under control. Albania is not a party to the 1988 UN Drug Convention.
II. Status of Country
Albania lies on the Balkan Route which is a primary source of drugs bound for western Europe. Heroin
and other drugs reportedly enter Albania, by land and by sea, from Turkey, Bulgaria, and the Former
Yugoslav Republic of Macedonia (FYROM). These drugs then generally leave Albania either by sea to
Italy or overland to Greece.
Cultivation/Production. Cannabis is becoming a significant cash crop for Albania's impoverished
farmers. Some heroin poppy is also cultivated in rural areas. There are unconfirmed reports of
laboratories which process raw heroin or synthetic drugs, in addition to laboratories which cut refined
heroin. Yet we have no evidence that either poppy or cannabis are cultivated in sufficient quantities to
meet the statutory definition for a major producing country.
Drug Flow/Transit. Albanian organized crime groups are reportedly an increasing presence in those
western European countries with significant ethnic Albanian populations. Such groups reportedly also
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collaborate with Italian, Greek, Turkish, and FYROM drug syndicates.
Demand Reduction. Use of heroin and other narcotics in Albania continues to rise, according to press
reports, non-governmental organizations, and anecdotal evidence. The increase is especially serious
among the young. Nevertheless, levels of use likely remain below those in neighboring countries.
Some experts assert some of the pyramid schemes which dominated Albania's economy in 1996 and
collapsed in March-April 1997 were involved in both the drug trade and money laundering. At least one
bank in Albania is also being investigated for suspected money laundering.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The virtual disappearance of Albania's police forces during the unrest in March-April
1997 left the country's border-crossing points open to drug trafficking. Albanian police estimate as much
as 200 kilos of pure heroin entered Albania during March and April, the period of the worst domestic
violence. The new government which took office in July 1997 has made considerable efforts to restore
order and to regain control of the country's borders, but armed groups continue to operate and smuggling
remains rampant. Steps which the new government took include strengthening the counternarcotics
section of the Interior Ministry. Staff levels in the section were increased in late 1997 from 30 to over
100. One central office is now responsible for measures to combat drug trafficking, while another is
tasked with addressing the problems of drug cultivation and production. Ten regional offices work with
the police throughout the country.
Law Enforcement Efforts. A division within the police to combat economic crime was established in
August 1997. In addition to its anti-smuggling responsibilities, the section includes a three-person unit
responsible for money laundering and other financial crimes. This unit has cooperated with its Italian
counterparts on investigations.
Corruption. For trafficking as well as for money laundering, corruption remains an obstacle to effective
counternarcotics law enforcement activities.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The US has repeatedly urged successive Albanian governments to address
narcotics trafficking and related problems. The DEA's Athens office, which has responsibility for
Albania, was not active in the country in 1997 due to the domestic security situation.
Multilateral Cooperation. While most drugs produced in or shipped through Albania are destined for
EU countries, the EU has not provided assistance directed to counternarcotics efforts. There is, however,
operational cooperation with the authorities of neighboring countries.
The Road Ahead. Embassy Tirana is exploring ways to increase counternarcotics training and
cooperation. The DEA's Athens office also plans to resume counternarcotics cooperation with the
Albanian authorities.
ARMENIA
I. Summary
Armenia's geographic position makes it a potential transit route for narcotics from the Middle East,
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central Asia, and Russia destined for western Europe. Domestic consumption is small but expanding,
with cocaine and heroin perceived as a domestic problem only since 1996. Armenia is a party to the
1988 UN Drug Convention. Armenia hosted two visits by representatives of the UNDCP in January and
November 1997.
II. Status of Country
According to the Department on Combat Against Illicit Drug Trafficking of the Ministry of Interior and
National Security (MINS), Armenia, due to its geographic position, has recently become a center and a
transit point for international drug trafficking. Drugs are coming from Iran, Lebanon, and the Russian
Federation (Armenia's border with Turkey remained closed due to the Nagorno-Karabakh conflict).
MINS official statistics state that 53 percent of drug transit enters Armenian territory by truck and 45
percent by air. MINS reported six cases of drug smuggling registered in 1997; the same source estimated
that 60 percent of the drugs consumed locally are imported, particularly heroin and opiates. Hemp and
opium poppy grow wild in the north, in the Lake Sevan basin and in mountainous regions.
Drug abuse, though growing, is still at relatively modest levels. The traditional drugs of choice are
opium and cannabis. In 536 tests for drug abuse made at the state Narcotics Dispensary during 9 months
of 1997, 74 percent revealed use of cannabis and 26 percent opiates. According to MINS, the Republic
of Armenia registered its first seizures of heroin and cocaine in 1996.
Health Ministry statistics confirm an upward trend in drug abuse. At present, there are 536 drug addicts
registered at the Narcotics Dispensary; in 1996 the number was only some 450. The MINS and the
health authorities, however, consider this figure the "tip of the iceberg." By 1997 estimates, the true
number of drug addicts in Armenia is more than 20,000, most of them in the 35-40 age group. (In 1995,
the number of drug addicts was estimated as 10,000).
III. Country Actions Against Drugs in 1997
Policy Initiatives. A 1995 presidential decree gave "priority status" to drug control programs in
Armenia, establishing a state Interagency Commission chaired by the Minister of Interior and National
Security. The Commission includes representatives of the Defense Ministry, Customs, Health Care,
Education and Science, Prosecutor's Office, regional governors, and public organizations. The
Commission drafted a national drug control master plan aimed at improving legislation and
strengthening border controls, law enforcement activities, and health care programs. In 1996, the plan
was passed to the Government of Armenia (GOAM) for expertise.
The Ministry of Interior and National Security clarified that no drug labs were seized in 1997. In a
recent speech, the Minister said 1650 persons were identified as drug addicts, and estimated that the real
total was about 15,000.
The United Nations Drug Control Program (UNDCP) made an assessment mission to Armenia in
November 1997. A new statute in the draft criminal code will make money laundering in Armenia and
anti-narcotics legislation on par with international standards. The legislation would cover five areas,
including new classification of drugs, harsher sentences for drug sales, strict control over licit
production, sale, and distribution of pharmaceutical drugs of psychotropic nature, and money
laundering. UNDCP also emphasized demand reduction, to be addressed through an effective long-term
drug control effort. UNDCP drafted an assistance program to give greater impetus to the GOAM's
counternarcotics program.
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Accomplishments. Armenia is in the process of completing a massive overhaul of the judicial and legal
system, including civil and criminal codes and new/retrained judges and prosecutors. The new draft
criminal code, which should be ratified in 1998, will make money laundering a criminal offense.
Law Enforcement Efforts. 383 tons of cannabis and 14.5 tons of opium poppy were destroyed by the
police in 1997. Armenia has substantial numbers of unemployed chemists. According to the MINS, six
illicit chemical laboratories producing synthetic drugs were discovered during 1995-1997.
There was a rise in drug-related crimes in 1997. MINS reports 772 drug-related crimes/violations
committed in the first nine months of 1997, compared to 517 in all of 1996, and 569 in 1995. The
Prosecutor General's Office reports that in 1996 and first 6 months of 1997, 128 people were convicted
by the courts for drug sales and 688 for drug abuse.
Corruption. Corruption is recognized by the GOAM as a serious concern in their efforts to stem the
flow of narcotics to and through Armenia. The press reported that in April 1997, four police officers
were arrested and charged with drug trafficking.
Agreements and Treaties. Armenia is a signatory to the 1996 Dushanbe Agreement of the NIS
countries on cooperation and narcotics control. In addition to the 1988 UN Drug Convention, Armenia is
a party to the 1971 UN Convention on Psychotropic Substances and the 1961 UN Single Convention
and its 1972 Protocol. Armenia has signed bilateral agreements on cooperation against illicit traffic in
narcotics and psychotropic substances with the State Customs Service of Turkmenistan, the Customs
Committee of the Republic of Georgia, and the Customs Committee of Tajikistan. An agreement on
drug control assistance between the GOAM and Iran is being drafted.
Cultivation and Production. Cannabis and opium poppy grow in the wild in the northern areas of
Armenia, in particular, in the Lake Sevan basin and mountainous areas. The MINS reported 383 tons of
hemp and 14.5 tons of opium poppies located and destroyed in 1997.
Drug Flow/Transit. Drug transit is recognized as the most serious concern for the GOAM. The main
drug routes have been identified as being from Iran, central Asian countries, and Russia. Drugs
transported are opium and hashish, though small amounts of heroin and cocaine were seized in 1996 and
1997. There is no evidence that these narcotics reach the US in significant quantities.
Demand Reduction. Narcotics treatment/demand reduction is one of the most serious concerns of the
health service, which reports a significant increase in drug usage in 1997: 536 patients registered at the
Narcotics Dispensary. The Dispensary has assigned a physician to each of Armenia's ten provinces.
However, limited financial means and inadequate conditions at the hospital prevent them from launching
an "early intervention" campaign in Armenia. There are a handful of drug-related NGOs, including a
"No to Alcohol and Drugs" and "Hope" Medical Center, which provide anonymous treatment for drug
addicts and lectures at schools on the dangers of alcohol.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. One officer from the Department of Combat Against Illicit Drug Trafficking of
MINS participated in International Narcotics Enforcement Management Seminar No. 78 in Alexandria,
Virginia, on June 2 - June 26, 1997. A MINS forensic chemist participated in DEA International
Forensic Chemists' Seminar No. 23 on June 2 - June 13, 1997. UNDCP has proposed a $600,000
program of training and equipment for Armenian authorities.
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The American Bar Association and the Office of the Prosecutor General held a conference in October
1997 in Yerevan to discuss legislative amendments and cooperation with neighboring states for an
effective anti-drug campaign in Armenia. Representatives of the Military Prosecutor and lawenforcement officers from both Yerevan and provinces participated in the conference.
The Road Ahead. As Armenia emerges from its post-independence economic, social and political
crises, the Government of Armenia is beginning to give the problem of narcotics trafficking greater
attention. Police and Customs have an urgent need for basic narcotics training and for improved
counternarcotics cooperation with the services of neighboring countries. Both in the context of UNDCP
and bilaterally, the US Government has an important role to play in assuring that all three Caucasus
countries develop the capability to control their borders for drugs, first through training, and
subsequently through the provision of key enforcement equipment.
AUSTRIA
I. Summary
Austria is primarily a transit country for drug traffic from the Balkans to Western European markets.
Illegal drug consumption is not a severe problem in Austria, and there is no significant production or
cultivation of illegal substances. A new Narcotic Substances Act passed in mid-1997 maintains severe
penalties for drug dealers while aiming at therapy rather than punishment for minor drug consumption.
Passage of this law enabled Austria to ratify the 1971 UN Convention on Psychotropic Substances, and
1988 UN Drug Convention in 1997. Austria remains an attractive site for drug-related money
laundering, although the government continues to implement measures to narrow avenues for money
launderers and facilitate asset seizure and forfeiture. New legislation allowing the use of better
electronic tools to investigate drug-related crimes is expected to help contain the growth in foreignbased drug crimes. Austrian law enforcement authorities charged with combatting narcotics continue to
face a lack of adequate funds and personnel as a result of overall government spending cuts aimed at
reducing the deficit.
II. Status of Country
While Austria is not a significant producer of illicit drugs, foreign-based organized crime, including
drug activity, continues to grow in Austria. While Austria has taken a number of commendable
measures over the last few years to address money laundering, all of its efforts are overshadowed by the
continued availability of anonymous passbook accounts. Austria passed legislation in 1996 to abolish
the opening of new anonymous securities accounts; separate legislation, passed in 1997, will expedite
extraditions as well as confiscation of property and assets arising from illegal activities.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The new Narcotic Substances Act, to become effective on January 1, 1998, focuses
on therapy for drug users while maintaining severe penalties for drug dealers. Drug dealers may face up
to 20 years in prison, while first-time users of cannabis may avoid criminal proceedings if they agree to
therapy. The new law, which prepared the ground for ratification of the 1971 and 1988 UN Conventions
by the government in fall 1997, provides penal provisions for those substances listed in Annexes III and
IV of the UN Psychotropic Substances Convention of 1971 and the precursor substances of Annexes I
and II of the 1988 UN Convention, which until then were not covered by existing legislation.
On October 1997, legislation went into effect to provide investigators with expanded powers to use
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wiretapping, electronic merging of data banks, and witness protection programs. Other new regulations
implemented in 1997 improve the government's capabilities in asset seizure and forfeiture, as well as
expedite extradition and expand judicial assistance.
Accomplishments. In addition to making major revisions to its drug laws in 1997, Austria continued to
participate in the EU's Monitoring Center for Drugs and Drug Addiction (EMCDDA). In 1997, Austria
joined the EU's Drug Prevention Program and is currently working to implement the EU-wide early
warning mechanism for synthetic drugs. The second annual country report on the drug situation in
Austria was completed in November 1997. The new report provides drug-related data, discusses the
effects of the new narcotics law, presents further initiatives for demand reduction, and addresses the ongoing structural reorganization of the country's organizations dealing with drug issues, such as
establishment of a central national coordination structure.
Law Enforcement Efforts. The number of drug-related criminal offenses in Austria increased by 23.7
percent to 16,196 in 1996. Authorities believe that one out of two criminal offenses is drug-related.
Although data for 1997 are not yet available, law enforcement officials expect a further rise of those
figures.
The number of seizures rose by 21 percent compared to 1995. In 1996, there were 4,838 seizures of
various forms of cannabis totalling 517 kilograms, 19 seizures of poppy straw totalling 8.6 kilograms,
17 seizures of raw opium totalling 1,103 kilograms, 1,110 seizures of heroin totalling 81 kilograms; 525
seizures of cocaine totalling 72 kilograms, 102 seizures of LSD totalling 4,166 trips, and 254 seizures of
Ecstasy totalling 25,118 doses.
A major narcotics case prosecuted in the US in 1996 with the cooperation of Austrian authorities
resulted in four sentences passed in 1997 ranging from twelve years to life imprisonment.
Corruption. The GOA has generally applicable public corruption laws. The US Government is not
aware of any high-level Austrian government officials' involvement in drug-related corruption.
Agreements and Treaties. The US-Austrian Mutual Legal Assistance Treaty, signed in 1995, was
approved by the Austrian government and sent to Parliament for ratification in November 1997. A new
US-Austrian Extradition Treaty was signed on January 8, 1998, in Washington. The new Treaty replaces
one of 1930, and its supplement of 1934.
In 1997, Austria ratified the 1988 UN Drug Convention, and acceded to the 1971 UN Convention on
Psychotropic Substances and the Council of Europe Convention. Austria expects to ratify the Europol
Convention in Spring 1998.
Austria is a party to the 1961 Single Convention and its 1972 Protocol. Austria is a party to the WCO's
International Convention on Mutual Administrative Assistance for the Prevention, Investigation, and
Repression of Customs Offences "Nairobi Convention" Annex X on Assistance in Narcotics Cases. The
United States Government has concluded a Customs Mutual Assistance Agreement (CMAA) with the
Government of Austria. Bilateral counternarcotics agreements are in place with Hungary, Poland,
Russia, Ukraine and Turkey. Similar agreements are planned with various NIS countries.
Vienna is the seat of UN Drug Control Program (UNDCP), and Austria is a UNDCP major donor.
Austria participates in World Health Organization (WHO), the Dublin Group within the European Union
(EU), the Financial Action Task Force on money laundering (FATF), and the Council of Europe's
"Pompidou Group."
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Austria is a member of the "Narcotics Work Group," in Wiesbaden, Germany, the "Work Group
Southeast," in Bavaria, and the "Work Group Southwest," in Baden-Wuertemberg, Germany.
Cultivation/Production. The US government is not aware of any significant cultivation or production
of illicit drugs in Austria. Although the Health Ministry reports that some home growing of cannabis
exists, no figures for such cultivation are available.
Drug Flow/Transit. Various routes of the Balkan drug path remain the major avenues for illegal
import/transit of Southwest Asian heroin through Austria. In a new development in 1997, drugs have
been transported back along the same route. This leads investigators to believe that drug dealers on both
ends of the route have closed ranks. The illicit trade is dominated by Turkish groups, followed by
traffickers from countries of the former Yugoslavia. Romanian and Bulgarian nationals have become
increasingly active. Macedonian and Albanian dealers continue to use nearby Bratislava, Slovakia as a
temporary depository for heroin.
Demand Reduction. Austrian authorities tend to address drug addiction as a disease, a fact reflected in
latest legislation and in court decisions. Demand reduction puts emphasis on primary prevention, drug
treatment and counseling, as well as on "harm reduction." Legislators in 1997 opposed individual calls
to allow heroin for therapeutic purposes, although Austria's westernmost province is considering a
research project on the adminstration of heroin for medical purposes.
Primary intervention encompasses the pre-school through secondary school levels, and includes
information kits and videos, as well as extracurricular youth counselling, educational campaigns via
mass media, telephone services, and community programs such as drug-free discotheques. Austria has
started various measures for HIV prevention, including syringe exchange programs, distribution of free
condoms, AIDS counseling, and free AIDS testing. Substitution programs have been in place for over a
decade.
Drug intervention policies are highly decentralized. Each of Austria's nine provinces employs a drug
coordinator (responsible for policy decisions) and a drug commissioner (responsible for health-related
aspects). Nevertheless, most drug treatment, counseling, and prevention services continue to be provided
by NGOs. During 1997, the domestic drug problem was highlighted by separate convictions of three
prominent Austrians (a ski jumping champion, a pop singer, and a TV sports anchorman) for illegal
consumption of cocaine.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. Although Austria has no specific bilateral narcotics agreement with the US,
Austrian cooperation with US investigative efforts is excellent. Austrian law enforcement officials
participated in a September 1997 seminar organized in Vienna by the US Department of Justice on asset
seizure and forfeiture.
The Road Ahead. The US will continue to support Austrian efforts to create more effective tools for
law enforcement, as well as to work with Austria within the context of US-EU initiatives. The US will
seek to increase cooperation with Austria on narcotics issues as Austria assumes the presidency of the
European Union in the second half of 1998. Promoting among Austrian officials a better understanding
of US drug policy will remain a priority.
AZERBAIJAN
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I. Summary
Azerbaijan's main narcotics problem arises from its location along the transit route from Iran and central
Asia north to Russia and central and Western Europe. Consumption and cultivation are at low but
increasing levels. The main seizures were in opium and cannabis. As a result of increased levels of local
drug usage, greater evidence of being a transshipment point, and increased international attention, the
country has come to realize the threat of narcotics. Azerbaijan is devising a national drug control
strategy, including appropriate legislation. The UNDCP has initiated a program of counternarcotics
assistance. Azerbaijan is a party to the 1988 UN Drug Convention.
II. Status of Country
Azerbaijan's main narcotics problem is the transit of drugs through the country. Government officials
point out that the shutdown of the "Balkan Route" due to conflict in the former Yugoslavia has increased
Azerbaijan's attractiveness as a transit route. Narcotics from Afghanistan and south Asia enter from Iran
and across the Caspian Sea from central Asia, and continue on to markets in Russia and Europe.
Azerbaijan has a nearly 700 kilometer frontier with Iran, but its border control forces and their
equipment is inadequate to patrol it effectively. Iranian and other traffickers are exploiting this situation.
Cross-Caspian ferries are also used to ship narcotics. Consumption is growing, with nearly 6,000
persons registered in hospitals for drug abuse. However, government officials estimate that the actual
level of drug use is many times higher. Illegal poppy and cannabis cultivation occurs, mostly in the
south of the country. The unregulated casino industry and the burgeoning underground economy provide
a potentially fertile ground for money laundering. Corruption permeates the economy, government
structures, and law enforcement, severely impeding counternarcotics efforts. Government authorities
fear that many among the hundreds of thousands of unemployed and displaced persons from the
Nagorno-Karabakh conflict are being drawn into drug trafficking as a source of income. The
government also claims that ethnic Armenians in the Armenian-occupied areas of Azerbaijan engage in
drug cultivation and transport, and that narcotics are transported across the approximately 100
kilometers of Azerbaijan's border with Iran that is under Armenian control.
III. Country Actions Against Drugs in 1997
Policy Initiatives. A government commission appointed last year promulgated a national program to
combat drug addiction and trafficking. The plan includes proposed legislation and organizational
measures, and technical requirements. The decree also instructs the Foreign Ministry to conclude
counternarcotics agreements with neighboring countries and other states. Azerbaijan is drafting new
narcotics legislation. The UNDCP has begun implementing a two-year $740,000 counternarcotics
assistance plan, which includes training of police, customs, and the border guards, and a technical
assistance program focused primarily on laboratory equipment. Laws already exist that criminalize drug
use and trafficking. Current legislation does not cover money laundering and is inadequate to tackle
police and judicial corruption.
Azerbaijan cooperates with Black Sea and Caspian Sea states in tracking and interdicting narcotics
shipments, especially morphine base and heroin. Caspian Sea cooperation includes efforts to interdict
narcotics transported across the Caspian Sea by ferry. Law enforcement officials report they have good
cooperation with Russia but encounter considerable reluctance from Iran.
Accomplishments. The government made modest progress toward creating a national counternarcotics
strategy. It also stated its willingness to cooperate with other countries and international organizations to
meet the threat. The government's cooperation with UNDCP is increasing.
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Law Enforcement Efforts. Data on drug seizures and arrests are not yet available, but all available
evidence suggests that they continue at approximately 1996 levels. Police discovered and destroyed 339
tons of illicitly cultivated narcotics plants, hemp and poppy. Police lack basic equipment and have little
experience in modern counternarcotics methods. Border control facilities on the Iranian border are
inadequate.
Corruption. Corruption impacts severely on law enforcement. Government officials including the
President and Prime Minister have admitted the gravity of the problem. Anti-corruption legislation is
being prepared. There have been no prosecutions of prominent offenders that would have a broader
deterrent effect.
Agreements and Treaties. Azerbaijan has no narcotics-related agreements or treaties with the US, and
no extradition agreement. Azerbaijan is a party to the 1988 UN Drug Convention, and has submitted the
1971 Convention on Psychotropic Substances and the 1961 Single Convention on Narcotic Drugs to
parliament. Last year, Azerbaijan signed a Protocol of Intent on counternarcotics cooperation with Iran.
Cultivation/Production. Cannabis and poppy are cultivated illegally in Azerbaijan. Authorities
discovered and destroyed 339 tons of cannabis and poppy under cultivation, mostly in southern
Azerbaijan.
Drug Flow and Transit. Opium and poppy straw originating in Afghanistan and south Asia transit
Azerbaijan from Iran, or from central Asia across the Caspian Sea. The government provides no figures
of amounts seized on these routes, or about foreign-origin as a percentage of all drugs seized.
Demand Reduction. The government has begun to realize the need for national drug control education
initiatives aimed at curbing consumption. A small part of the UNDCP assistance program is directed at
this goal.
The Road Ahead. The USG will continue to encourage Azerbaijan to expand its drug control activities
and to establish the necessary legislation and institutional capabilities to improve intra-government
cooperation and ensure effective prosecution of drug-related crimes. The USG will urge the GOA to
implement the provisions of the 1988 UN Convention.
BELARUS
I. Summary
Its economic, political and geographic situation gives Belarus significant potential to become a major
drug transit and production site. Belarus' location between Russia and the West, its good rail and road
transportation and a Customs Union with Russia that eliminated internal borders between the two
countries add to Belarus' viability as a narcotics transit corridor. Piecemeal and, in some cases, failed
efforts to move to a market economy have dislocated many workers, including some who are attempting
to get rich by illegal means. The Belarussian government claims to lack the financial resources to
combat drug trafficking as well. The claim is somewhat dubious, however, given the extremely large
police force--120,000 for a population of 10.7 million.
Belarus also faces many of the organized crime problems that plague other countries of the former
Soviet Union, albeit without the high profile evident in some neighboring countries (for example, fewer
gangland-style slayings). The lack of Belarussian laws on organized crime could lead syndicates to use
Belarus for not only drug production and trafficking, but also for other drug-related crimes such as
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money laundering.
II. Status of Country
According to data from the Government of Belarus (GOB), the number of persons admitting to nonmedical consumption of narcotics is 3,386. It is unclear if this is comparable to the number of registered
drug addicts, which at the end of 1996 was 2,965. These numbers do not include addicts which are
estimated to exceed these numbers by factors of 10. Belarussian authorities have estimated the true
number of drug addicts to be close to 10,000. Ecstasy and other synthetic drugs are being used as well as
opium poppy and oil poppy. Poppy straw extract is the primary drug of abuse. Cannabis products and
dangerous drugs such as ephedrine and benzodiazepines are also used. Recently, reports surfaced of PCP
(phencyclidine) available for local use.
The GOB says that 40 percent of the drug addicts reside in the Gomel region that includes Svetlogorsk,
which since the summer of 1997 has experienced an outbreak of the HIV virus of epidemic proportions.
The GOB also reports that during the first six months of 1997 (the period for which statistics are
available) there were 1,200 narcotics-related crimes, a 34.7 percent increase from the same period in
1996. A total of 772,276 kilograms of narcotic substances were recovered in connection with these
crimes. The GOB reports that in the first half of 1997, 697 people were arrested for drug crimes, an
increase of 11.7 percent from the same period in 1996. Included in this group are 138 women (up from
77 in 1996) and 25 minors. The majority of those arrested (70 percent) were unemployed and under 29
years of age.
III. Country Actions Against Drugs in 1997.
Policy Initiatives. The Ministry of the Interior and the National Security Service are the lead drug
enforcement agencies in Belarus. Other agencies involved include the Customs Service. Within the
Ministry of Interior, the Criminal Investigatikon Service is the primary entity dealing with illicit drug
trafficking throughout the country targetting organized crime and collecting drug trafficking
information. The Ministry of Interior also controls the Border Guards Directorate. The National Security
Service (formerly the KGB) is involved in all cases involving contraband, which necessarily includes
drugs. The Customs Service is responsible for interdicting drugs at the borders, but it must transfer cases
to the Ministry of Interior wihtin 10 days of a seizure. The Ministry of Health is in charge of nationwide
drug treatment.
Cultivation and Production. In the first half of 1997, 2,481 square meters of narcoplants were
destroyed, according to official Belarussian statistics. That compares with 1,465 square meters for the
same period in 1996, a 69 percent increase (a corrected figure from the 1996 INCSR). Included in the
cultivation destroyed were: 2,160 square meters of poppy, 246 square meters of cannabis, and 75 square
meters of wild cannabis.
Drug Flow/Transit. Belarus is growing in importance as a transit country. Good rail and road
connections running East to West and North to South are used to transport narcotics from Ukraine,
Central Asia, the Caucasus, Russia, the Baltic States, Poland and Germany. The most frequent route is
from the Ukraine through Belarus to Russia. Opiates and cannabis shipments from the Central Asian
Republics or from the Caucasian region are routed through Belarus to destinations in Western Europe.
Opium poppy straw is moved through the region and distributed to local addicts.
Law Enforcement Efforts. Belarussian President Lukashenko has placed organized crime and drug
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trafficking on the national agenda, but results have been unclear. In the second half of 1997, the GOB
launched a highly-publicized "crackdown" on corruption.
Demand Reduction. No national drug abuse prevention strategy exists in Belarus. The emphasis has
been on treatment and social rehabilitation, and only limited efforts are devoted to preventive and
educational programs. Treatment for drug addicts is generally performed in psychiatric hospitals. The
emphasis on all programs is to achieve detoxification. There is little psychosocial counseling or social
rehabilitation. Given the HIV epidemic, there is a new focus on clean needle distribution programs.
Agreements and Treaties. Belarus is a party to the 1988 UN Drug Convention, the 1961 UN Single
Convention and its 1972 Protocol, and the 1971 UN Convention on psychotropic substances. The United
States and Belarus concluded negotiations on a Mutual Legal Assistance Treaty, however, it has not
been signed or ratified.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The USG provided one training session to a three-person delegation to
Washington for a drug seminar in 1997. Due to the deterioration of bilateral relations as a result of
human rights abuses, the USG did not provide any other law enforcement training or assistance in 1997.
Multilateral Cooperation. In May 1993, Belarus joined the Teledrug Information System initiated by
Italy in September 1992. Belarus is also a member of Interpol. In addition, Belarus has participated in
regional efforts at law enforcement cooperation and has signed bilateral agreements on cooperation
against organized crime and drug trafficking. Belarus signed an agreement in 1993 on drug control
assistance with Italy, and has talked about similar agreements with Austria, Bulgaria, Sweden and
Germany. The GOB has signed interstate treaties on assistance with Lithuania and China, and Belarus is
a party to the CIS Convention on Legal Assistance.
The Road Ahead. The USG would like to improve training programs, particularly in the realm of
regional training as human rights abuses decline. These training programs would be very specific in
focus and need to include law enforcement agencies from neighboring countries.
BELGIUM
I. Summary
Belgium is not a major narcotics or precursor chemical producing country. Belgium is a transshipment
country for illicit drugs on their way to destinations in Western Europe. Belgian law enforcement
agencies have observed a continued increase in drug trafficking through Belgium from Asia and the
Middle East via the Former Soviet Republics. Belgium is a party to the 1988 UN Drug Convention and
takes seriously its obligations under that Convention.
II. Status of Country
Due to its large port facilities, transportation infrastructure, and central location in Western Europe,
Belgium is a transit country for illicit drugs bound for other markets in Europe. Belgium is not a
significant producer of illicit drugs, nor is it a significant manufacturer of precursor chemicals. Belgian
efforts to detect and block drug-related money laundering have expanded and intensified.
III. Country Actions Against Drugs in 1997
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Policy Initiatives. In June 1997, a Parliamentary Commission published its report on Belgian drug
policy. Parliament adopted the recommendations of the report which included strengthening existing
money laundering laws, strengthening asset seizure and confiscation legislation, increasing international
police and judicial cooperation, creation of methadone treatment programs, and improvement of drug
education programs. The report also recommended assigning the lowest prosecution priority to simple
possession of cannabis.
The Belgian Ministry of Justice maintains drug liaison offices in ten foreign cities with territorial
competence for thirty-one countries. The drug liaison offices in Bogota, The Hague, Istanbul, Madrid,
Moscow, Paris, Rome, Vienna, Washington, and Wiesbaden are staffed by either Judicial Police or
Gendarmerie (national police) officers. The Ministry intends to open offices in Warsaw, London, Ottawa
and Pakistan as soon as budgetary resources permit. The Government of Belgium expected full
EUROPOL ratification before the end of 1997.
Accomplishments. In 1997, as part of judicial reform measures, a central prosecutor was appointed to
oversee drug prosecutions nationwide.
Belgium entered into bilateral police cooperation agreements with Hungary, Poland, Romania, Slovenia
and Slovakia. These agreements are comprehensive in nature. They include the framework/guidelines
for cooperation on narcotics matters. Belgium is in the process of concluding two such additional
agreements with the Czech Republic and Bulgaria.
In May 1997, Parliament passed legislation on international judicial cooperation regarding seizure and
confiscation of drug assets. The law authorizes the Belgian judiciary to execute foreign judgments for
seizure and confiscation of assets derived from drug trafficking or money laundering. This law is
designed to implement provisions of the 1988 UN Drug Convention.
Parliament is currently debating organized crime legislation that endorses a broader definition of money
laundering to cover other professions and activities, including notaries, financial advisors, accountants,
real estate agents, and casinos.
Law Enforcement Efforts. Belgium fully met the objectives of the 1988 UN Drug Convention. Belgian
law enforcement authorities pro-actively and vigorously investigate individuals and organizations
involved in illegal narcotics trafficking into and through Belgium.
Belgian authorities use modern techniques which are generally effective. Interdiction efforts by Belgian
customs authorities at Antwerp and Zeebrugge are exemplary. During the first three quarters of 1997,
Belgian authorities in Antwerp seized more than 1,973 kilograms of cocaine, 10.4 kilograms of heroin,
and more than 25,532 kilograms of cannabis. They arrested more than 53 persons in connection with
these seizures.
Corruption. Corruption is not judged to be a problem within the narcotics units of the law enforcement
agencies. Legal measures exist to combat and punish corruption.
Agreements and Treaties. The Government of Belgium is currently negotiating police cooperation
agreements with Morocco and Russia. It expects these agreements to be signed in Spring 1998. Belgium
has signed and ratified the 1988 UN Drug Convention. Belgium is a party to the 1961 UN Single
Convention and its 1972 Protocol. The USG has concluded a Customs Mutual Assistance Agreement
(CMAA) with the Government of Belgium.
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Belgium is a member of the Financial Action Task Force (FATF) and currently chairs the organization's
ninth session (1997-98). Belgium has implemented the EU Directive on Money Laundering and
participates in the Contact Committee established by the Directive.
Belgian authorities cooperate bilaterally on money laundering issues with France (TRACFIN), The
Netherlands (MOT), the United States (FinCEN), Italy (Guardia di Finanza), Norway (OKOKRIM) and
the UK (NCIS).
The United States and Belgium have long had an Extradition Treaty. Instruments of ratification were
exchanged on an updated Extradition Treaty in Washington in July 1997. The Supplementary Treaty on
Extradition, signed in 1987, was ratified by the US Congress in November 1996. Belgium has not yet
ratified this Supplementary Treaty. A US/Belgium Mutual Legal Assistance Treaty (MLAT), signed in
1988, was approved by the Belgian Senate in July 1997 and is scheduled to be reviewed by the Belgian
Chamber of Deputies in December 1997.
Belgium is a member of several international anti-drug organizations, including the Heads of European
Narcotics Law Enforcement Agencies (HONLEA), the European Committee to Combat Drugs
(CELAD), the Pompidou Group and the Dublin Group. Belgium is a major donor to the United Nations
Drug Control Program (UNDCP). Most Belgian aid is channeled through the UNDCP to crop
substitution and alternative development programs in Bolivia.
Cultivation/Production. There is no significant cultivation or production of illicit drugs in Belgium.
Drug Flow/Transit. Belgium remains an important transit point for drug traffickers because of its port
facilities (Antwerp is Europe's second busiest port), airports, excellent road connections to neighboring
countries, and central geographic location. Most illicit drugs pass through Belgium via the ports of
Antwerp and Zeebrugge; across the border from the Netherlands; or to a lesser degree through Brussels'
Zaventem airport. Smuggling routes change constantly, but Belgian authorities believe an increasing
number of drug shipments arrive from Asia and the Middle East through Eastern Europe and the NIS.
Demand Reduction. Belgium has an active anti-drug educational program which targets the country's
youth. Such programs are now administered by the Regional Governments (Flanders, Wallonia, and
Brussels).
IV. US Policy Initiatives and Programs
Bilateral Cooperation. Law enforcement cooperation between the United States and Belgium is
excellent and expanding. DEA and FBI enjoy close and effective cooperation with the Judicial Police
and the Gendarmerie. (Note: Police restructuring has given narcotics enforcement responsibility
primarily to the Gendarmerie. The Judicial Police continue to work drug-related organized crime cases.)
US law enforcement agencies represented in Brussels enjoy excellent working relationships with the
Belgian National Magistrates and prosecutor's offices.
Belgium participates in an informal organization known as the Egmont Group of which Belgium is a cofounder. Belgium chairs the Egmont Legal Working Group which drafted a model Memorandum of
Understanding on International Cooperation on Money Laundering issues.
The Road Ahead. The United States looks forward to continued close cooperation with Belgium in
combatting illicit drug trafficking and drug-related crime, and to continued Belgian participation in
multilateral counternarcotics fora such as the Dublin Group and the UNDCP.
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BULGARIA
I. Summary
Centrally located on the Balkan route, Bulgaria is an important transit point between Turkey and western
Europe for southwest Asian heroin and southeast Asian marijuana. Authorities have seized South
American cocaine in Bulgaria en route to western Europe, and the heroin-essential chemical Acetic
Anhydride en route to Turkey. Bulgaria also has a very minor incidence of domestic cannabis
cultivation. Bulgaria is a party to the 1988 UN Drug Convention. In 1997, the Government of Bulgaria
(GOB) enacted extensive anti-crime legislation, issued decrees on precursor chemical control, drafted a
new and more comprehensive money laundering law, began preparation of a new narcotics control law,
spearheaded diplomatic initiatives to increase regional counternarcotics cooperation, introduced a
compulsory school-based demand reduction program, and gave greater focus to combatting
amphetamine production, culminating in the raid of a large scale production lab. Domestic drug use,
while relatively low, continues to increase. Law enforcement authorities cooperated actively with US
and third country counterparts on counternarcotics cases and in an increased number of controlled
deliveries.
II. Status of Country
Bulgaria is a significant drug-transit country centrally situated on the traditional Balkan route between
Turkey and Serbia, serving also as a transit point between Turkey and both Romania and the former
Yugoslav Republic of Macedonia. Small quantities of opium poppies and cannabis are grown in
Bulgaria. Clandestine labs produce amphetamines, and diverted Acetic Anhydride (AA) is transported
from Bulgaria to Turkey.
In Bulgaria's transition from a socialist to a more market-oriented system, large-scale redistribution of
ownership rights has been the occasion for laundering illegally diverted state assets and other illegally
obtained funds. Similarly, CD piracy, auto theft, protection rackets and financial fraud are lucrative
sources of proceeds for organized crime, which is active in many sectors of the economy. Funds from
unsecured insider lending, which contributed to the country's 1996 banking sector collapse, have largely
been laundered through expatriation. The new Bulgarian government, which has made combatting
organized crime and corruption a priority and adopted considerable new anti-crime legislation, is
engaged in efforts to improve money laundering legislation and to track diverted funds.
III. Country Actions Against Drugs in 1997
Policy Initiatives. In compliance with obligations taken by Bulgaria under the 1988 UN Drug
Convention, the Council of Ministers in February 1997 issued two decrees controlling the export,
import, trade, production and use of controlled chemical substances used in narcotics production
(precursors). Bulgaria's new parliament, elected in April, has adopted extensive anti-crime legislation
and penal code amendments which, inter alia, expedite judicial processing, establish punitive measures
that can be taken against organized crime and racketeering, criminalize and penalize tax evasion, permit
the use of wire tapping and surveillance data as evidence, provide some witness protection and increase
the severity of sentences for numerous crimes including narcotics trafficking. The GOB is also preparing
a comprehensive new law for the control of narcotic drugs, psychotropic substances and precursor
chemicals, delaying for the moment its revision of the 1996 draft counternarcotics master plan. The draft
law, which will include the 1997 decrees on precursor chemicals as well as relevant penal code and
procedural penal code amendments, is to be considered by the Council of Ministers in April 1998 and
thereafter presented to Parliament.
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A law defining and realigning the functions of the component services of the Ministry of Interior was
adopted in 1997, and a similar law regulating customs is under parliamentary consideration. A new draft
money laundering law, which criminalizes money laundering, includes provisions on asset seizure, and
otherwise considerably improves on the largely ineffective 1996 law, has been prepared.
Diplomatically, Bulgaria has spearheaded regional cooperation in counternarcotics. On October 3, at a
GOB-initiated meeting in Varna, the presidents of Bulgaria, Romania and Turkey signed a joint
declaration on fighting international criminal threats, including narcotics trafficking. In a joint statement
on December 3 at the Euro-Atlantic Partnership Council, the Bulgarian and Turkish Defense Ministers
also stressed the need for mapping out specific measures for fighting international crime on a
multinational basis within the EAPC framework.
At the working level, through a number of high-level visits, and in Ministry of Interior protocols, the
Governments of Bulgaria and Turkey have coordinated closely this year on issues of narco-trafficking,
terrorism and organized crime.
Bulgaria is participating in a World Customs Organization program to strengthen regional customs
border enforcement and has consulted extensively with the EU on combatting money laundering through
strengthened legislation. A UNDCP project renovating and equipping Kapitan Andreevo, the Bulgarian
border point most heavily trafficked in drugs, was completed in 1997. Bulgaria, Romania and
Macedonia are participating in a multi-year, UNDCP-PHARE program initiated in December to increase
counternarcotics land, sea and air border control, improve controlled deliveries; and develop intelligence
information systems. (The EU Phare Multi-Country programme for the Fight Against Drugs seeks to
strengthen the anti-drug capacities of 11 Central and Eastern European states and to assist those states in
preparing for a role in EU's anti-drug strategy plan.)
Accomplishments. Noteworthy developments toward achieving compliance with the goals and
objectives of the 1988 UN Drug Convention include the Council of Minister's decrees increasing
precursor control, the drafting of a new money laundering law (to include asset seizure) and preparation
of a new narcotics control law, increased Bulgarian participation and regional cooperation in controlled
deliveries, diplomatic initiatives to increase regional counternarcotics cooperation, the introduction of a
compulsory school-based demand reduction program, and a greater focus on combatting amphetamine
production, culminating in the raid of a large scale production lab. Regular meetings of the National
Council for Combatting Drug Abuse and Drug Trafficking, led by the Minister of Health, increased
interministerial cooperation.
Law Enforcement Efforts. Bulgarian law enforcement officials seized over 2,370 kg of illegal drugs at
border points, airports, and inland points of distribution, including a 220 kg seizure of amphetamines
transitting Bulgaria from Romania to Turkey and the first seizure of Ecstasy. Authorities also made a
3420-liter seizure of the precursor chemical, AA. Bulgarian law enforcement authorities also raided two
clandestine amphetamine production labs in 1997, the second of which was for industrial production of
amphetamines, and 500 liters of liquid amphetamine were seized. In all, the GOB made 151 arrests.
Bulgarian law enforcement cooperated with European and US counterparts and international
organizations in focusing efforts on major traffickers. Bulgaria's police and customs officials cooperated
in a wide range of international controlled deliveries, including their first with Russia.
Bulgarian Customs has reduced the number of regional customs houses from 16 to 5, while
decentralizing some authority from Sofia to the remaining regional houses. Customs manpower has been
reduced from 4,100 to 3,690, and there have been substantial personnel changes with the change in
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government. The Ministry of Interior's Central Service for Combatting Organized Crime has been
upgraded to a national service with regional offices, and its border guard has been changed to a border
police. A new section for drug control has been set up in the Criminal Division of the National Police
with a regional presence nationwide. The country's priority on counternarcotics law enforcement
remained constant.
Corruption. Corruption is widespread in Bulgaria, including among police and customs officials.
However, the USG has no specific information that senior GOB officials are involved in drug trafficking
or other narcotics-related crimes. The new Bulgarian government has made the fight against organized
crime and corruption a major part of its program and has launched an extensive reform effort to
strengthen anti-crime legislation. In the fall of 1997, a temporary parliamentary commission met for two
months to investigate institutional problems in the fight against crime and corruption and to propose
executive measures and legislation for their elimination. Bulgaria signed the OECD Anti-Bribery
Convention in 1997.
Agreements and Treaties. Bulgaria is a party to the 1988 UN Drug Convention, the 1961 UN Single
Convention and its 1972 Protocol, the 1971 Convention on Psychotropic Substances, and the 1990
Council of Europe Convention on Laundering, Search, Seizure and Confiscation of Proceeds from
Crime.
The US-Bulgarian extradition treaty dates from 1924. Bulgaria is also party to the 1957 Council of
Europe Convention on Extradition, the 1959 European Mutual Legal Assistance Treaty in Penal
Measures, and the 1983 Council of Europe Convention on Transfer of Sentenced Persons. It also has a
bilateral Treaty with Turkey for the Transfer of Convicted Persons. Bulgarian customs has MOU's on
mutual assistance and cooperation with a number of its European counterparts and it negotiating or
updating others. This year, Bulgaria signed an agreement with the Customs Administration of the
Former Republic of Yugoslavia.
Cultivation and Production. Law enforcement officials found and eradicated 21 hectares of illegal
cannabis cultivation in 1997, 2.5 times the 8.263 hectares (incorrectly reported in last year's INCSR as
8,263) erradicated in 1996. The Ministry of Interior, the Prosecutor's Office and local authorities
launched a major cannabis eradication awareness campaign in the three regions most involved. No
opium poppy cultivation was identified or eradicated this year.
Law enforcement officials do not routinely calculate crop size and yields for illegal narcotics crops.
When necessary, case-specific determination is made based on the weight of the dry leaves yielded from
one square meter times the dimensions of the field. In general, yield calculations for illegal narcotics
crops are difficult since it is not unusual, for example, to find cannabis hidden in a field of maize.
Drug Flow/Transit. The main illegal drug transiting Bulgaria is heroin from the Golden Crescent,
although marijuana and South American cocaine also transit Bulgaria. The Balkan route from Turkey
through Bulgaria to Serbia, and other overland routes north to Romania and west to the Former
Yugoslav Republic of Macedonia are most frequently used. The precursor chemical Acetic Anhydride,
possibly produced in Bulgaria or coming from Macedonia is transported from Bulgaria to Turkey.
Bulgaria has seen an increase in heroin trafficking and in heroin seizures this year. There were no
maritime narcotics seizures in 1997.
Demand Reduction. The drug abuse problem in Bulgaria is small but growing. Experts estimate that in
this nation of 8.3 million people, there 25,000 to 35,000 heroin users, less than 10 percent of whom are
in treatment. Cocaine is too expensive for all but the wealthy. Use of marijuana and Ecstasy are new
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problems but growing rapidly. Increases in drug consumption have been particularly noteworthy among
the marginalized Roma population, in prisons, in localized geographic areas, and among traffickers.
Demand reduction is receiving increased attention in Bulgaria. This year, for the first time, the Ministry
of Education has made compulsory in schools nationwide the teaching of health promotion modules on
substance abuse. There is also a WHO program for health promotion in 30 target schools. Both the
Bulgarian National Center for Addictions and the Open Society Foundation provide training seminars on
drug abuse for school teachers nationwide. There are also municipal demand reduction programs cosponsored by the National Center for Addictions and the Institute of Public Health in six major cities,
and a number of smaller communities. Three universities provide professional training in drug
prevention.
For drug treatment, 35 out-patient units and 10-12 in-patient facilities exist nationwide. The National
Center for Addictions has psychiatric units in 20 regional centers. Specialized professional training in
drug treatment and demand reduction has been provided through programs sponsored by UNDCP, EU
PHARE and the Council of Europe's Pompidou Group.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The USG seeks to promote increased attention to the problems of narcotics
trafficking and money laundering, to assist Bulgarian law enforcement and anti-crime legislative reform
efforts with training, advisory assistance and some equipment, and to encourage further cooperation
between Bulgarian and other law enforcement agencies, including DEA, the FBI, and US Customs.
Bilateral law enforcement cooperation between law enforcement officials in the US and Bulgaria
remained excellent. Over the past year, US bilateral assistance for law enforcement and counternarcotics
has focused on training, including a US Customs counternarcotics train-the-trainer course, FBI training
in auto theft investigations, training at the International Law Enforcement Academy in Budapest,
Hungary, mid-level police training, and US Secret Service courses in computer forensics and in forensic
applications to combat financial crime and counterfeiting. The USG also provided advisory assistance to
the GOB in its penal code and procedural penal code reform.
The Road Ahead. The USG will continue to encourage the GOB in its anti-drug efforts, in combatting
money laundering, in drafting and implementing its anti-crime legislative reforms and in its mutual
cooperation with US law enforcement. It will work with the GOB to identify its law enforcement
training, advisory and equipment needs and to provide limited assistance to meet those needs. The USG
will also promote counternarcotics cooperation with regional and western European countries and
encourage western European assistance and UNDCP support for Bulgarian law enforcement authorities.
CROATIA
I. Summary
With the consolidation of peace in the region, Croatian authorities are concerned about an increase in
drug trafficking and use in Croatia. Of particular concern is the possibility of the rejuvenation of Balkan
route variants which crossed a part of Croatia's territory. To respond to the growing threat, the Ministry
of Interior's Narcotics Division has increased the resources devoted to counternarcotics, including
funding a drug division or unit in every police department throughout the country. The Parliament also
approved laws that remove legal impediments on undercover investigations, use of controlled deliveries,
and the technical collection of evidence (i.e. audio and video recording), and that improve the
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Government of Croatia's (GOC) ability to combat money laundering. The Narcotics Division continues
to follow an action plan and a national strategy to combat drug abuse and is carrying out a training
program for counternarcotics officials. Croatia is a party to the 1988 UN Drug Convention.
II. Status of Country
Croatia, with its extensive coast line, geographic location, and limited resources for patrolling its coast,
offers great possibilities for transhipping narcotics. Variants of the Balkan route crossed a large part of
Croatian territory prior to the war in the former Yugoslavia. With the consolidation of peace in the
region, narcotics traffickers are increasingly using the southern portion of the route from Turkey through
Bulgaria to Serbia. They may seek to use legs from Serbia through Croatia to western European markets.
There are indications that the amount of narcotics transiting Croatia is increasing. There are also
indications that the number of persons using drugs is increasing, particularly in the major urban areas
(Zagreb, Split, Osijek, and Rijeka).
Croatian authorities are concerned that Croatia's banking sector, which is being reformed, may be
vulnerable to money laundering.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The government's reorganization of the criminal police within the Ministry of Interior
has resulted in a more effective counternarcotics capacity. The National Drug Division has overseen the
work of smaller drug divisions and units in every police department throughout the country. The drug
division has also maintained cooperative relationships with Interpol, and counterparts in Slovenia, Italy,
Germany, the Former Yugoslav Republic of Macedonia, Hungary, and the United States. Law
enforcement contacts expanded with several other nations, as well. The Ministry of Interior is
responsible for maintaining and implementing a counternarcotics action plan. It also assists in the
implementation--with other relevant ministries--of the national strategy to combat drug abuse.
Parliament recently approved a law to remove legal impediments on undercover operations, use of
controlled deliveries, and the technical collection of evidence (i.e. audio and video recording). Use of
these techniques will be legal on January 1, 1998. Parliament also approved a law to remove the
government's ability to investigate and prosecute money laundering. This law went into effect on
November 1.
Accomplishments. The Ministry of Interior has completed a plan to assume full responsibility for
Eastern Slavonia, a region that had previously been under control of the United Nations or rebel Serbs.
During the year, GOC officials worked with UN officials to combat narcotics transiting in the area under
United Nations control. The establishment of Croatian customs and police checks along many recently
reopened border crossings with Bosnia has also inhibited the renewed use of these routes for
transshipment of narcotics. Croatia also became the 29th member of the Pompidou Group, a Council of
Europe body responsible for preventing the trafficking and abuse of narcotics. The Customs Service also
initiated an aggressive training program to ensure that all customs officials are adequately trained in
counternarcotics issues.
Law Enforcement Efforts. The amount of narcotics seized during the year increased dramatically. In
May, the Croatian police seized 375 kilograms of cocaine, the largest single cocaine seizure in Croatia's
history. Law enforcement efforts continued to be focussed on arresting users and suppliers and
confiscating narcotics.
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Corruption. There have been allegations of corruption within senior levels of the ruling party and
government. None of these allegations have linked officials to narcotics-related corruption, however.
Agreements and Treaties. Croatia is a party to the 1988 UN Drug Convention; the 1961 UN Single
Convention and its 1972 Protocol, and the 1971 UN Convention on Psychotropic Substances.
Extradition between Croatia and the US is governed by the 1902 treaty with Yugoslavia.
Drug Flow/Transit. With the consolidation of peace in the region, the GOC opened several border
crossing points with northern Bosnia, and regularized the status of border crossing points with western
Bosnia. The establishment of customs regimes at these points has likely inhibited the flow of narcotics
through Croatia. The volume of traffic transiting the Zagreb/Belgrade highway increased dramatically
over the year, although the GOC maintained adequate customs controls along the Serbian border. There
was a large increase in the volume of cocaine transshipping the Dalmatian seaports, particularly the Port
of Rijeka.
Demand Reduction. The Ministry of Health, with primary responsibility for domestic programs, has
established some demand reduction programs, albeit with limited resources. The Ministry of Education
requires drug education programs in primary and secondary schools. The state-run national medical
system also offers treatment programs for drug users.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. The USG continued to urge increased attention by the Government of Croatia to
the drug issue. At the GOC's invitation, DEA agents conducted a two-week regional advanced seminar
to train senior counternarcotics police officials from Croatia, Hungary, the Former Yugoslav Republic of
Macedonia, the Slovak Republic, and Slovenia. The US Coast Guard conducted training on how to
board vessels suspected of smuggling and how to plan joint naval, police, and customs operations to
interdict smuggling; additional Coast Guard training is planned. All of the USG officials who
participated in the training reported a high level of competence and commitment to combatting narcotics
trafficking. Liaison between the DEA, US Customs, and other USG agencies with narcotics
responsibilities and their GOC counterparts continued to be excellent.
The Road Ahead. With the return of the region and as travel between neighboring nations becomes less
cumbersome, drug trafficking through Croatia is likely to increase, expanding the opportunities for
organized crime involvement and money laundering. The USG will continue to encourage the GOC to
expand its drug control activities and implement its counternarcotics legislation. We also hope to train
additional Croatian counternarcotics officials, and solidify our ties with the GOC institutions combatting
narcotics.
CYPRUS
I. Summary
Cyprus does not produce or consume significant amounts of narcotics, but its geographic location and
relatively sophisticated business and communications infrastructure make it vulnerable to drug
trafficking and international money laundering activities. Cyprus is a party to the 1988 UN Drug
Trafficking Convention (Vienna Convention) and the government (GOC) enforces tough anti-drug laws.
Law enforcement authorities maintain excellent relations with United States government (USG) and
other foreign government counterparts. Legislation to implement the EU Convention on Laundering,
Search, Seizure and Confiscation of the Proceeds from Crime was passed in April of 1996. An essential
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element of the new GOC law was the formation of a money laundering investigations unit (SIU) which
began operations in 1997 and coordinates the GOC's efforts. In 1997, GOC authorities used the law to
freeze assets involved in a fraud case valued at more than USD $12 million.
Cyprus monitors the importation and exportation of chemicals for local markets. However Cyprus'
geographic location and the free-port status of its two main seaports make it an ideal transit country for
trade in chemicals and other goods between Europe and the Middle East.
II: Status of Country
Cypriots do not produce or consume significant quantities of drugs. The island's strategic location in the
Eastern Mediterranean and its current status as a gateway to and from Lebanon and elsewhere make it a
convenient stopover for traffickers, especially from Lebanon and Turkey (for northern Cyprus). Still low
by international standards, drug-related crime has been steadily rising since the 1980's.
Cyprus' success as an international offshore center has made it vulnerable to international money
laundering activities. The significant presence of Russian and other Eastern European persons and
entities who have chosen to incorporate among Cyprus' more than 25,000 off-shore companies has
raised questions as to whether these companies have been used to shelter the proceeds of illicit activities,
such as drug trafficking, arms sales, or theft of state resources, or have been used simply for tax fraud.
The SIU believes Cyprus' efforts in this area have reduced money laundering activity. The Central
Bank's efforts in recent years are encouraging. There has been a falloff in detected illicit financial
activity on Cyprus during the last two years.
Cypriot law now carries a maximum prison term of one year for drug users under 25 years of age with
no police record. Sentences for drug traffickers range from four years to life, depending on the
substances involved and the offender's criminal record. Cypriot law allows for the confiscation of drugrelated assets and the freezing of profits (or a special investigation of the suspect's financial records),
although no drug-related assets have ever been seized under this law (Note: The USD $12 million in
assets frozen under the 1996 law involved fraud.)
III: Country Actions Against Drugs in 1997
Policy Initiatives. The SIU began operations in January 1997. It is comprised of three representatives
each from the Department of Customs, Police, and the Attorney General's office. The Unit's coordinator
works directly for the Attorney General. In late 1997, the Council of Ministers approved a key provision
of the 1996 money laundering law creating an advisory committee made up of representatives of Cypriot
banks, accounting firms, legal firms, and other bodies well-placed to fight such crimes. In November,
the GOC closed the law's most important loopholes by appointing supervisory authorities to oversee
banks, insurance companies and the stock exchange.
In February, the Central Bank issued guidance to Cypriot banks on customer identification procedures
and, in August, regulations regarding prohibitions against the opening of bank accounts in Cyprus by
certain individuals. Seminars and training to combat money laundering have been provided to an ever
expanding audience of police and banking officials. The SIU has issued 16 information disclosure orders
and the Central Bank issued customer identification regulations to combat money laundering through
domestic and offshore banking facilities. Cyprus has had an asset forfeiture statute since 1992.
Law Enforcement Efforts. There were no significant changes in the GOC's law enforcement structure
in 1997. Police authorities act aggressively to combat the small amount of illicit production of cannabis
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and equally low level of illicit drug use. GOC law enforcement agencies, in cooperation with the SIU,
trained more than 500 police officers in the rules and procedures of the 1996 law against money
laundering. They also made such training an element of basic training. The GOC has excellent
cooperative relations with its neighbors and Western nations, including the US, and is quick to assist
when requested. Both the SIU and law enforcement officials acquired extensive training in 1997 from
the US, UK, EU and others.
International enforcement cooperation is constrained by the political division of the island into the
internationally recognized Republic of Cyprus (GOC) in the south and the "Turkish Republic of
Northern Cyprus" in the north. GOC authorities have no working relations with enforcement authorities
in the "Turkish Republic of Northern Cyprus." Turkish Cypriots have their own law enforcement
organization responsible for the investigation of all narcotics-related matters. Turkish Cypriot authorities
have shown willingness to pursue narcotics traffickers and provide assistance when asked by foreign law
enforcement authorities.
Corruption. Corruption in Cyprus is limited. There is no evidence of senior or other officials
facilitating the production, processing, or shipment of drugs or the laundering of drug-related assets.
Agreements and Treaties. A new extradition treaty between the USG and GOC was signed in June
1996, replacing one in effect since 1931. The ratification process is under way in both countries. An
initial round of negotiations on a proposed mutual legal assistance treaty took place in Washington in
October 1997, and we expect the negotiation process to continue in 1998.
Precursor Chemical Control. There is no production of precursor chemicals in Cyprus nor is there any
indication of illicit diversion. Precursor chemicals manufactured in Europe do transit Cyprus to third
countries. Cyprus Customs no longer receives manifests of transit goods because the seaports of Larnaca
and Limassol have been declared "free ports." Cyprus Customs is considered an income generating
rather than law enforcement agency. Goods entering Cypriot free ports can be legally re-exported using
different customs documents as long as there is no change in the description of the goods transported.
Cultivation/Production. The only known production is the limited, but increasing, cultivation of
cannabis for individual use and, on a smaller scale, for resale.
Drug Flow/Transit. No significant increase was observed in 1997. Cyprus police maintain that their
efforts in combating drug trafficking have mostly converted Cyprus from a drug transit point to a
"broker point" for dealers, most likely the result of improved conditions in Lebanon from which
containerized freight now moves directly to third countries without transiting Cyprus. As in 1996, there
were occasions in 1997 when kilograms of heroin seized in London were identified as transiting
northern Cyprus from Turkey. There were also seizures in Cyprus of heroin coming from Iran. Cyprus is
also a transit point for cocaine transported by commercial air from Brazil and destined for the Middle
East and the former Soviet countries.
Domestic Programs. Drug abuse remains relatively mild in Cyprus and is concentrated among the
young and tourists. Hashish is the most commonly used drug, followed by heroin and cocaine, all of
which are available in most major cities. Recent increases in drug use have prompted the government to
promote demand reduction programs through the school system and social organizations, occasionally
with DEA-Nicosia participation. Drug treatment is available.
IV. US Policy Initiatives and Programs
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The US supports the GOC's efforts to deter money laundering activities in Cyprus through a number of
activities:
--The Ambassador and other members of the US Embassy in Nicosia raised the issue repeatedly during
1997 with key GOC officials;
--An intergency team of senior USG officials met in February with high ranking GOC officials to
discuss money laundering policy and to implement cooperative measures;
--A US money laundering assessment team (led by representatives of the US Comptroller of the
Currency) visited Cyprus in April and made recommendations for domestic enforcement improvements
and planned on-going bilateral cooperation;
--The SIU, and a representative of the Central Bank, completed a two-week USG-funded on-site training
program in the US; the SIU also participated in a DEA-led regional money laundering/asset forfeiture
training seminar in Israel.
The Road Ahead. The GOC's aggressive advances on the anti-money laundering front and its excellent
cooperation on drug law enforcement during 1997 warrant USG optimism for even stronger bilateral
cooperation in 1998. We will continue to track closely government efforts to prevent the use of Cyprus'
offshore sector as a money laundering center and will be vigilant in further assessing the possible
presence of organized crime on Cyprus.
CZECH REPUBLIC
I. Summary
The Czech Republic is a transit country for illicit drug smuggling of heroin originating in Turkey, the
Middle East, and South Asia; cocaine from South America; and cannabis from Nigeria, Tunisia and
Pakistan bound for Western Europe. Domestically, methamphetamine abuse is the most serious drug
problem, but heroin abuse is growing. Drug abuse among young people is more prevalent, and is
occurring at younger ages. In 1997, Czech authorities recorded an increase in narcotics-related arrests
and prosecutions. A law passed in October 1997 expands restrictions on a range of controlled
substances, newly including hemp and poppy seed crops. Legislation proposed for 1998 will seek to
regulate precursor chemicals and tighten possession laws. Cooperation between Czech authorities, US
and European counterparts is excellent, and training and assistance programs have been effective. The
Czech Republic is a party to the 1988 UN Drug Convention.
II. Status of Country
Czech police estimate about 20 percent of the illicit drugs entering the country are consumed
domestically. Another 20 percent are seized, and the remaining 60 percent are smuggled out again.
Kosovar Albanians dominate much of the domestic drug market, although Turks, Romanians, Nigerians,
and Czech nationals are also active. Czech authorities suspect that Russian and Kosovar Albanian
groups have agreed to "carve up" Czech territory, reserving narcotics trade for the Albanians, while
allowing the Russians predominant control of racketeering and prostitution. Cocaine trafficking from
South America continues to grow, coordinated in several 1997 cases by Czech emigres residing in Peru
and Colombia.
Out of a population of 10 million, Czech authorities estimate some 200,000 are dependent on drugs,
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although they lack accurate statistics on hard core addicts. Pervitin, an inexpensive, locally-produced
stimulant, is widely abused, as is marijuana. Heroin is the second most widely-abused drug; readily
available in major Czech cities, taken intravenously by many first-time users. Cocaine is priced beyond
the reach of most Czechs, limiting consumption mainly to "drug tourists" from western Europe.
III. Country Actions Against Drugs in 1997.
Policy Initiatives. In mid-1997, the Czech National Drug Commission (NDC) emerged from a
prolonged leadership crisis when the Prime Minister reinstated its Coordinator. Participants in the NDC
include the Ministries of Education, Health, Social Welfare, Interior, Justice and Defense. In 1997, NDC
presented to Parliament its second three-year strategy for 1998-2000, which foresees a balance between
enforcement and expanded prevention and rehabilitation measures.
In October 1997, the Parliament passed a law that tightens controls on narcotics and psychotropic
substances, including a new reporting requirement on the cultivation and harvesting of poppy seeds and
hemp. The law also enhances substance controls by requiring liscensing for manufacturers, importers,
exporters, health-care and research institutes that produce or handle such substances. NDC is drafting a
bill for submission to Parliament in early 1998 to regulate precursor chemicals and criminalize
possession of defined quantities of narcotics and psychotropic drugs in an effort to target dealers.
Accomplishments. To implement the 1988 UN Drug Convention and enhance domestic anti-drug
efforts, Czech authorities in 1997 made progress in the following areas:
A core of 18 national police investigators completed training in counternarcotics specialties. Ten month
statistics for 1997 reveal the greatest increase in arrests in the drug-active areas of Central Bohemia
where these specialized officers were deployed.
Cooperation was expanded with US and European counterparts, leading to a greater number of Czech
citizens arrested abroad on drug charges as a result of international investigations.
Despite government-wide austerity measures that cut the Interior Ministry's budget by over 8 percent,
domestic arrests and prosecutions increased, while police staffing and training in the narcotics field
expanded.
Additionally, Czech police in 1997 improved their ability to operate across jurisdictions, working with
detectives and prosecutors to secure arrests and successfully prosecute cases, particularly through
increased undercover operations.
Law Enforcement Efforts. Through the first ten months of 1997, Czech police reported 3597
investigations related to narcotics offenses, leading to 3573 court charges filed and 1434 arrests, almost
a 50 percent increase in all categories over 1996 figures. In 1997, the Czech National Antidrug Center
(similar to DEA) introduced counternarcotics instruction into the overall training for all regional and
municipal police. As a result of this effort, the number of small methamphetamine labs closed by local
authorities rose sharply in 1997. (Final Czech official statistics for 1997, including seizures, are
expected in January 1998.)
Corruption. The USG has no evidence of official narcotics-related corruption in the Czech Republic.
Agreements and Treaties. The Government of the Czech Republic (GOCR) is party to the 1961 UN
Single Convention and its 1972 Protocol, the 1971 UN Convention on Psychotropic Substances, and the
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1988 UN Drug Convention. It has also signed the Council of Europe's Convention on Money
Laundering, Seizure, and Confiscation of Proceeds from Crime. There is an Extradition Treaty in effect
between the US and Czechoslovakia, which applies to the Czech Republic. The US and the Czech
Republic have negotiated an updated extradition treaty, as well as a Mutual Legal Assistance Treaty
(MLAT). The US-Czech MLAT is expected to be signed in early 1998. Finally, the USG has concluded
a Customs Mutual Assistance Agreement (CMAA) with the Government of the Czech Republic.
Cultivation and Production. There is no coca cultivation. Domestic production of marijuana and
production of opium is insignificant. Permission to grow cannabis or opium poppies must be obtained
from the Ministry of Health, but producers are not centrally registered and there is no accurate
evaluation of production levels. This will change with the enactment of the above-mentioned October
1997 law. Heretofore, production of poppy seeds (used widely in Czech cuisine) and cultivation of
cannabis was virtually unrestricted. Cannabis production is not illegal unless it is produced in quantity
for purposes of ingestion as marijuana. The law is vague, however, and the NDC reports considerable
inconsistency in the prosecution of this statute in many Czech jurisdictions. The Czech National
Antidrug Center has appealed for a standardized, enforceable interpretation of the law concerning
cannabis/marijuana.
Illicit Refining and Manufacturing. The Czech Republic is a major producer of precursor and essential
chemicals for pharmaceutical use, but does not legally control the production and export of precursors.
NDC is drafting a bill for submission to Parliament in 1998 that would include control for precursor
chemicals. Czech law enforcement, however, cooperates efficiently with international counterparts to
stop illicit exports of precursors when made aware of them. Czech national anti-drug police have seized
imports of precursor chemicals originating from Slovakia, Hungary, and China, and amphetamines
originating in Poland.
The major substance abused in the Czech Republic is Pervitin, a stimulant made from Ephedrine, which
is believed to be produced in small clandestine laboratories and a limited number of larger ones.
Consumption is primarily domestic but Pervitin is also exported to Germany and Canada. In a new
development in 1997, Czech nationals reportedly were paid by illicit drug manufacturers to travel to
other areas of Europe to prepare Pervitin on site, thereby reducing the risk of arrest for carrying illicit
products.
Demand Reduction. As a country in transition, the Czech Republic has struggled to find a balance
between protecting society and protecting individual rights. National authorities acknowledge that abuse
of controlled substances poses a threat to society, but they have been reluctant to restrict an individual's
right to experiment, imposing lenient standards for "personal use" of drugs. This attitude has hardened
recently, with evidence that a younger group of users has expanded its choice of drugs to include heroin,
cocaine, and (in isolated cases) crack. The government's gradually stricter orientation toward abusers is
reflected in the NDC's draft bill on precursor chemicals and possession.
There is also increased recognition of the need to forestall drug abuse through preventive education.
NDC has revised planning for national school-based abuse prevention programs, seeking expertise from
the USG and other foreign donors for curriculum development and instructor training on narcotics and
alternate social behaviors.
IV. US Policy Initiatives and Programs
Bilateral Cooperation. Czech authorities aggressively sought USG assistance in 1997 to counter
narcotics trafficking and consumption. Czech ministries and police authorities joined in an international
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conference held February 11-14 in Prague under the auspices of the US Drug Enforcement
Administration (DEA) and the European Commission (EC). DEA also conducted training for Czech
forensic chemists, health inspectors, and narcotics enforcement managers. Other US law enforcement
agencies conducted a financial fraud seminar in June, and a financial investigative techniques seminar in
October for Czech finance and police officials designed to enhance skills to combat money laundering.
The Road Ahead. The USG will continue to support the Czech Republic's efforts to strengthen its
counternarcotics capabilities. A major area of concentration will be assisting in the development of
curriculum materials and training of trainers for the school-based drug abuse prevention programs.
Despite the Czech Republic's "graduation" in 1997 from the USAID foreign assistance program, support
for counternarcotics training and education will continue through programs at the International Law
Enforcement Academy (ILEA) in Budapest and from other sources of funding.
DENMARK
I. Summary
Denmark is a drug transit country primarily to Europe because of its strategic geographical location. Its
excellent air traffic and shipping facilities make it northern Europe's primary transportation hub. The
Danes not only cooperate closely with their Scandinavian neighbors and the EU to stop the transit of
illicit drugs, but also play an important role in assisting the Baltic States to combat narcotics trafficking.
While the quantities of drugs seized in Denmark are relatively small, Danish authorities suspect that a
high volume of drugs transiting Denmark went undetected as a consequence of their open border
agreements and high volume of international trade. Within Denmark, the availability of cocaine
continued to increase in 1997 and Ecstasy pills remain popular among a growing number of young
Danes.
II. Status of Country
Drug traffickers utilize Denmark's excellent transportation network to bring illicit drugs to Denmark for
domestic use and for transshipment to other Nordic countries. There is also evidence that drugs from
Russia, the Baltic countries, and Central Europe pass through Denmark en route to other EU states and
the US, although the amount flowing to the US is relatively small.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Denmark has complied with the requirements of all major international conventions
and agreements regarding narcotics. Denmark continues to contribute toward the development of
common counternarcotics standards within the international organizations of which it is a member.
Denmark's interagency group responsible for monitoring the distribution of precursor chemicals reported
no infractions in 1997. Denmark provided training, financing, and coordination assistance to the three
Baltic countries (Estonia, Latvia and Lithuania) as it did last year, principally to improve interdiction
efforts, and helped the Drug Enforcement Administration (DEA) set up a school in Denmark in August
for this purpose.
Accomplishments. Danish police continue their counternarcotics efforts. Because of public outcry over
the release of arrested drug dealers in 1996, many of whom were foreigners, Danish law was amended to
make it easier to place drug dealers behind bars and to expel foreign dealers who illegally reside in
Denmark. Danish authorities view narcotics-related money laundering as a manageable problem in spite
of Denmark's role as a major financial center. Banking procedures are transparent and are subject to
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government review to minimize the likelihood of illegal use of the banking system.
Danish law permits forfeiture and seizure in drug-related criminal cases. Authorities strongly uphold
existing asset seizure and forfeiture laws and cooperate with foreign authorities in such cases. Statistics
on asset seizure are not available and, in any event, are not regarded as significant by the Danish
government. Denmark promotes international cooperation on chemical precursors.
Law Enforcement Efforts. Danish officials have already seized higher quantities of cocaine and
amphetamines in 1997 than in 1996, reflecting an increasingly effective narcotics control effort. In 1997,
51.4 kilograms of cocaine and 39.6 kilograms of amphetamines were seized. Increases in multigram
seizures of cocaine can be attributed to closer cooperation between Danish law enforcement officials and
their Nordic and German counterparts. The decrease in the quantity of heroin seized in Denmark so far
in 1997 (7.7) kilograms results to a great extent from heroin seizures in other countries, which otherwise
would have reached Denmark. Denmark helped improve interdiction capabilities in the Baltic states.
There is a continuing project on the Island of Bornholm, Denmark's easternmost territory, whereby the
Customs services and police, in tight cooperation with the Royal Danish Navy, seek to interdict
narcotics, other smuggled contraband, and illegal migrants.
Corruption. The USG has no knowledge of any involvement by Danish government officials in drug
production or sale, or in the laundering of their proceeds.
Agreements and Treaties. Denmark ratified the 1988 UN Drug Convention in 1991 and signed on to
the enabling legislation for the (European Drug Unit) EDU in 1997. The USG has concluded a Customs
Mutual Assistance Agreement (CMAA) with the Government of Denmark. Denmark participated in the
Dublin Group and EU meetings on related topics.
Drug Flow/Transit. Drugs transit Denmark between its neighbors and, in small quantities, to the US
according to law enforcement sources in Denmark.
Demand Reduction. Denmark's Ministry of Health estimates that there are between 10,000 and 12,000
drug users in Denmark. The country has an extensive counternarcotics education programs in schools
and youth centers. Drug addicts are treated in a large number of institutions throughout Denmark. In
addition to in-patient care at hospitals, out-patient care is also available at hospitals, youth crisis centers,
and special out-patient clinics. These programs are free of charge to Danish residents. The government
continues to fund programs introduced in 1996 which involve the forced treatment of addicts--persons
who agree to undergo treatment as an alternative to serving prison sentences in certain cases. These
programs remain small in scope. The government has also attempted to declare certain prisons "free
from drugs." There continues to be an on-going political debate surrounding a proposal, which is
vehemently opposed by the police, that would permit doctors to supply some addicts with heroin. An
inter-ministerial group is studying the feasibility and desirability of such a program which has the
support of the political parties in the government, but on which the government has not acted.
The Road Ahead. In the coming year, the Danish authorities plan to increase their seizures of ecstasy
pills within Denmark and to work closely with the Norwegians in interdicting heroin bound for Norway
via Denmark. The Danes have also entered into a formal agreement with other Nordic countries called
Politi Told Nordic (PTN) to share information and cooperate against narcotics trafficking. PTN has
already placed a Danish police officer in Lithuania under this program. Domestic legislation to supply
addicts with free clean needles is expected to be approved in 1998, and the controversial proposal to
allow doctors to supply some addicts with heroin under Ministry of Health supervision is also likely to
pass.
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Washington, DC, March 1998
AFRICA
AND
THE MIDDLE EAST
BENIN
Benin is a transit point for Southeast and Southwest Asian heroin destined for Europe and the United
States. At this point, we lack sufficient evidence that the share coming to the US is coming in quantities
sufficient to have a significant effect. Benin also continues to be an important transshipment point for
cocaine from South America and marijuana, which departs the country primarily through its
international airport. Marijuana is grown in Benin, and is consumed almost exclusively in country.
Money laundering is also a problem, with traffickers using legal businesses to camouflage drug
operations to launder illicit profits. GOB authorities also suspect that the flourishing market in used cars
is being used as a method of laundering drug money. Some traffickers have moved operations from
Nigeria to Benin, with the result that the country has seen an increase in traffickers operating out of
Cotonou in addition to using Benin as a transit point. These traffickers are choosing Benin because they
have been subject to virtually no constraints in their operations. Benin became a party to the UN Drug
Convention in May. Benin is also a party to the other UN narcotics conventions.
President Kerekou continued his efforts to reduce public corruption through a presidential task force
charged with identifying corrupt practices and recommending plans of action. Little progress has been
made in addressing the entrenched and institutionalized corruption existing among career government
bureaucrats, despite recommendations made by the presidential task force. Following highly publicized
corruption scandals, the Directors General of the state-run petroleum company, cotton company and
utility provider were fired, and the Chief of Staff of the armed forces was forced to resign. But
corruption remains a way of life for many on small salaries, and also for the upper bureaucracy.
In June, the National Assembly adopted a comprehensive anti-narcotics law that had been awaiting
passage since 1994. This law was based on a model law prepared by the United Nations Drug Control
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Program (UNDCP) to bring countries into compliance with the 1988 UN Drug Convention. It
modernizes the legal framework within which Beninese law enforcement works by increasing sentences
for traffickers, criminalizing money laundering, and permitting the forfeiture of drug-related assets. This
law, once fully implemented, could go a long way toward making Benin a far less hospitable country for
drug traffickers. While the new anti-drug law provides hope that Benin can improve its performance, in
practice its current drug enforcement efforts are less than adequate. Resources allocated to the police
unit charged with drug enforcement are far below minimum requirements and until now there has been
no concerted government policy to combat trafficking. It appears that little or no effort is made to pursue
major traffickers despite widespread acknowledgment of such activities. The few law enforcement
resources that do exist are exclusively devoted to arresting and prosecuting small-scale couriers and
users.
COTE D'IVOIRE
I. Summary
Cote d'Ivoire continues to serve as a transit point for narcotics- heroin from Southeast and Southwest
Asia and South American cocaine destined for European, and to a lesser extent, North American
markets. We have no indication that quantities reaching the US are significant. There is minimal
production of low grade cannabis, primarily for domestic consumption. Domestic abuse of artificial
drugs, in particular amphetamines and barbiturates, is a continuing concern. The vast majority of those
arrested for drug-related offenses are Ivorian nationals. The National Drug Police (NDP), while
recognizing the problem of narcotics trafficking, continues to be hampered by a lack of resources. The
French Ambassador to the Cote d'Ivoire recently advocated that the United Nations Drug Control
Program (UNDCP) and the European Union's (EU) African Anti-drug Program, plan to coordinate their
efforts in providing additional training and resources in the coming years. Cote d'Ivoire is a party to the
1988 UN Drug Convention.
II. Status of Country
Abidjan serves as a major West African financial center and regional hub for international airline travel.
Sub-standard security measures at Abidjan's airport currently do not meet US Federal Aviation
Administration (FAA) standards for direct flights to the US. Money laundering and drug trafficking
provide a significant challenge for the Government of Cote d'Ivoire (GOCI).
III. Country Actions Against Drugs in 1997
The GOCI continues to take steps toward meeting all the 1988 UN Drug Convention objectives. The
post of National Security Advisor was created in 1996 (see below). The GOCI hosted in February 1997
an Economic Community of West African Nations (ECOWAS) Inter-ministerial Meeting on Narcotics.
Accomplishments. The GOCI continues to closely cooperate with the UNDCP for training needs and
regional cooperation. In 1997, as in the previous year, the European Union also offered training, as does
the US. The French Ambassador to Cote d'Ivoire voiced his concern that the organizations offering
police training have sometimes appeared more competitive than cooperative; he advocates a more
coordinated approach, which the USG wholeheartedly endorses. The major impediments continue to be
the question of what training is necessary and the lack of resources to support these efforts.
Law Enforcement. Drug arrests are running at about the same level as 1996. Law enforcement efforts
continue to focus primarily on minor traffickers, as the major traffickers are Middle Eastern groups and
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Europeans, usually located beyond local jurisdiction. Some knowledgeable local observers speculate
about a probable correlation between drugs and regional wars (in neighboring Liberia and nearby Sierra
Leone); others wonder whether Abidjan's large communities of Shiite Lebanese, Ghanaians and
Nigerians aren't involved in the drugs and arms trade. There are reports that heroin may be transiting
Cote d'Ivoire mainly by sea, (smuggled in rice sacks from Thailand), but also by air. Enforcement
authorities of the GOCI seized a container aboard a Moroccan freighter in late 1996 containing one ton
of hashish.
A position of National Security Advisor was created in late summer of 1996 to be the central
coordinator for all military and law enforcement activities, to include counter-narcotics. Law
enforcement efforts on the working level continue to be hampered by a lack of resources.
Corruption. There were no significant arrests and/or prosecutions for drug-related corruption in 1997.
Agreements and Treaties. The GOCI is a party to the 1961 UN Single Convention its 1972 Protocol,
the 1971 Convention on Psychotropic Substances, and the 1988 UN Drug Convention. In 1992, 1993,
and 1994, Letters of Agreement with the USG were signed calling for US assistance for the
establishment of a GOCI capability to suppress the cultivation, processing, trafficking, consumption and
export of illicit narcotics. The GOCI is also a party to several regional counter-narcotics cooperation
agreements.
Cultivation/Production. Cannabis is grown (in limited quantities) and concealed in cocoa plantations in
the south, east and western areas of Cote d'Ivoire, primarily for local consumption. The National Drug
Police have no reliable methodology for determining crop size and yields, and we have no basis to
believe that it amounts to 5000 ha. Of course, if the police discover a crop, they burn it.
Drug Flow/Transit. Abidjan's Houphouet-Boigny airport continues to be utilized as a transit point for
the flow of heroin and cocaine to European and heroin to North American destinations (e.g. Middle East
Airline (MEA) flights provide a convenient connection between Sao Paulo and Beirut with scheduled
stop-overs in Abidjan). Security provisions currently in place at ports and the airport do not adequately
address trafficking concerns. We have no indication that quantities of narcotics reaching the US from
Cote d'Ivoire are significant.
Demand Reduction. The GOCI's efforts at demand reduction and counternarcotics education programs
are limited to infrequent news articles on drug abuse and the publication in the media of the penalties
associated with illicit narcotics use/trafficking. The EU is working with the GOCI on an ambitious fouryear master plan, in coordination with the UNDCP, beginning with a national workshop scheduled to
meet outside Abidjan in January 1998. The initial focus is to be on prevention and public education
(largely through non-governmental organizations), followed by programs addressing law enforcement,
treatment/re-habilitation, training of personnel, and, inter-regional cooperation.
IV. US Policy Initiatives and Programs. USG counter-narcotics goals in Cote d'Ivoire continue to
focus on limiting the use of Abidjan as a transit point for narcotics trafficking. US counternarcotics
assistance has relieved some of the GOCI's logistical problems, and allowed police officers to return to
the field better equipped (vehicles, radios). The next step will be increased training efforts.
EGYPT
I: Summary
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During 1997, the Arab Republic of Egypt was forced once again to expend the majority of its security
resources on combating terrorism, instead of narcotics. Egypt's counternarcotics security apparatus, the
Anti-Narcotics General Administration (ANGA), however perseveres amidst finite resources and lack of
jurisdiction and administrative control to combat trafficking and cultivation of narcotics. Egypt is a party
to the 1988 UN Drug Convention, although enforcement of the Convention's provisions is uneven. In a
regional or in a worldwide context, Egypt plays a minor role in drug production, trafficking, money
laundering and import/export of precursor chemicals. However, Drug Enforcement Administration
(DEA), Cairo believes that Egypt's role as a transshipment point for narcotics remains significant.
II. Status of Country
Egypt is not currently a significant producer, or trafficker of narcotics on the international scene.
Moreover, money laundering and problems associated with precursor chemicals are not serious.
Nevertheless, Egypt is experiencing the initial symptoms of a fledgling heroin producing country which
could impact on future trafficking of this substance to other international locales. Additionally, the use
of Cairo International Airport and the Suez Canal as transshipment points continues to be a concern.
Further complicating Egypt's counternarcotics efforts, ANGA is without a comprehensive master plan
for combating and eradicating narcotics. Basic enforcement authority such as access to the Tarmac at the
airport is not within ANGA's jurisdiction, which complicates investigative efforts. Also, addiction in
Egypt is considered by local medical experts to be on the rise, based on the increased numbers of
patients undergoing treatment programs.
At present, no heroin "Signature Program" (To identify Egyptian heroin and distinguish it from, say,
Pakistani heroin) exists in Egypt. According to local DEA representatives, this is a vital component to
determining the source of production. From Aug. - Oct. 97, there were 83 reported deaths in Alexandria,
Egypt from use of contaminated heroin. While the official cause of death was reported as Tetanus, all
the victims showed signs of long-term heroin addiction. Subsequent tests on heroin samples taken from
the Alexandria area indicated soil contamination caused from improper storage. Corresponding to
increased signs that Egypt's battle with heroin may be loosing ground, opium poppy cultivation is on the
rise in the Sinai. Interestingly, this increase in poppy cultivation does not correspond to traditional,
domestic opium (as opposed to heroin) addiction. In view of the fact that Egypt is not known to be an
exporter of opium poppy, growing domestic heroin processing and abuse is seen as the logical
consequence of growing cultivation.
III. Country Actions Against Drugs in 1997
Policy Initiatives. While the GOE formally adopted a drug control strategy in November 1994, that
strategy is floundering due to resource limitations and lack of cooperation between the various law
enforcement authorities. 1997 did see Sinai eradication elevated to a higher priority for ANGA. In
cooperation with Cairo DEA, ANGA has begun to initiate a systematic approach to verification of
cultivation areas in the Sinai by using land navigation equipment.
Accomplishments. The increased focus on Sinai eradication has produced positive results. In order to
maintain momentum, ANGA has established a full time eradication unit posted in the Sinai, consisting
of 50 officers and their constabulary support NCO's. Unfortunately, accurate estimates for illicit
cultivation remain an unfulfilled objective, as cannabis and poppy plants are still counted by hand.
The GOE does not accept the fact that there are domestic facilities associated with refining poppy into
heroin, although other observers believe that they are on the rise. Anti-money laundering legislation
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remains under review by the People's Assembly. On a positive note, ANGA did cooperate during 1997
with DEA to seize two million US dollars in assets from an alleged Egyptian narco-trafficker resident in
London. According to DEA, the individual in question had been suspected of narcotics trafficking for
sometime, was without visible means of support, but received millions of dollars in unexplained assets
each year. In the end, assets were seized, but no arrests were made because of jurisdictional issues.
Agreements/Treaties. Egypt and the US have an Extradition Treaty. The treaty has been in place since
1882. A mutual legal assistance treaty is also under negotiation.
Law Enforcement. There were no major arrests or seizures. ANGA does conduct an effective program
of arresting drug traffickers in Egypt, but the focus has been on low level abusers and traffickers.
Precursor chemical control in Egypt is hampered by uneven enforcement and complications related to
distinguishing between legitimate and illegitimate use.
Corruption. Corruption is pervasive in Egyptian society. Nevertheless, narcotics-related corruption in
the Egyptian government and ANGA has not been uncovered by either the US Embassy in Cairo or
DEA Cairo.
Cultivation/Production. Opium poppy is cultivated in the southern Sinai on a seasonal basis, and
cannabis is grown in the northern Sinai year round. Cannabis is also grown in some parts of Upper
Egypt. ANGA has developed a full time Sinai Eradication Unit and is beginning to establish a database
to track cultivation areas. ANGA also retains sources within the local Bedouin community in the Sinai
to assist in uncovering growing locations. In March of 1998, a civilian analyst from the US military
working out of the DEA Cairo office is scheduled to visit Egypt in order to assist with maintaining the
database. Crop sizes and yields are still measured by hand counting, which is not an accurate method for
measuring yields. Egypt does not have a crop substitution program or a herbicide eradication strategy,
although ANGA is pushing to implement the use of herbicides in controlling cultivation.
Domestic Programs (Demand Reduction). Egypt has a national anti-drug campaign which is sponsored
by the Ministry of Health and the Interior. This program targets school age children through the use of
the media and other public awareness campaigns. Demand reduction is included in a nationwide drug
awareness campaign being conducted by the GOE with support from DEA Cairo and a US military
information support team (MIST). Treatment, however, remains in the domain of private doctors and
psychologists.
IV. US Policy Initiatives and Programs.
US policy has the following objectives:
z
z
z
z
z
increasing training,
targeting eradication efforts,
improving interdiction,
improving crop estimate techniques,
improving intelligence collection and analysis.
In looking at the road ahead, the USG intends to work with Egypt to reduce Egypt's attractiveness as a
transshipment point and to decrease cultivation of opium poppy and cannabis.
GHANA
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I. Summary
Ghana continues to be in the forefront of the fight against drug abuse and illicit trafficking of narcotic
drugs and psychotropic substances in the region. The Narcotics Control Board (NCB) has focused its
attention on: enforcement and control measures; education and prevention measures; and
treatment/rehabilitation and social re-integration. Ghana is a party to the 1988 UN Drug Convention.
II. Status of Country
Cannabis is cultivated in about half acre plots on average by some farmers, inter-cropping cannabis in
vegetable and staple food farms. Cannabis cultivation is therefore clandestine and the extent of
production cannot be easily determined. Some marijuana from Ghana is smuggeled to other African
countries and to Europe. Cocaine continues to transit Ghana from Southeast and Southwest Asia to
Europe and the US. There is, however, no evidence that heroin transiting Ghana arrives in the US in any
significant amounts. Although initially destined elsewhere, some of these drugs are now consumed in
Ghana. Trafficking of cocaine and heroin through the Kotoka International Airport has gone down
considerably due to intensified security checks but the same cannot be said of the western and eastern
borders, both at Elubo at the border with Cote d'Ivoire and Aflao at the border with Togo. With
Nigerians trafficking cocaine and heroin through Benin and Togo, largely unhindered, Ghana is likely to
become a significant transit point from the Aflao and the Elubo border points.
II. Country Actions Against Drugs in 1997
Policy Initiatives. The Government's Narcotics Control Board has been stressing its leadership and
coordination role with other agencies involved in the domestic counternarcotics effort and with the
normal points for international cooperation against the narcotics threat. To achieve its objectives the
Board has nearly completed revising its Counternarcotics Master Plan. As of 1996, the Board had
submitted proposals to the government for the amendment of the country's narcotics drugs (control,
enforcement and sanctions) law; the proposals remained under review in 1997. Although anxious for the
amendments to be enacted, the Board is unable to predict when action on the matter will be taken by the
government.
Illicit Cultivation. Interdiction exercises by a combined group of the Board's rapid deployment team and
the police narcotics unit continued to search for production and distribution of drugs, as well as to
destroy illicitly cultivated cannabis farms/plants in 1997.
Enforcement. Figures for 1997 show a decline in arrests and seizures for cocaine, heroin and cannabisrelated offenses. The NCB credits this decline to publicity surrounding the arrest of a local drug baron.
The NCB believes that the arrest caused a deterrent effect among would be users and traffickers.
Additionally, the NCB reports that public response to reporting narcotics law violations has increased.
Ghana's laws provide for asset forfeiture in narcotics cases. The GOG intercepted a shipment of
ephedrine 9 (a precursor for amphetamine production) to a pharmaceutical company which was not in
possession of the proper license; the investigation is ongoing.
Seizures and arrests made up to September 1997 are as follows:
Jan. - Sept. 1997
Cocaine: 26 kg arrests: (8)
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Heroin: . 10 kg arrests: (1)
Cannabis (Refined): 264.77 kg arrests (72)
Cocaine: 2.30 kg arrests: (30)
Heroin: 3.85 kg arrests: (19)
Cannabis (Raw): 8,294 kg arrests: (939)
Demand Reduction. The demand reduction efforts of the Board are being carried out at the grassroots
level in rural areas. The Board is in contact with the Ministry of Local Government and Rural
Development to persuade members of 110 district assemblies to include narcotics prevention education
in their educational programs. In conjunction with school authorities, the NCB has helped establish
drug-free clubs in all second cycle schools to positively apply peer pressure in drug prevention
educatlon in schools. In support of this effort, the Board has prepared a booklet, "Guidelines for the
Formation of Drug Free Clubs in Schools" for use nationwide.
Agreements and Treaties. The 1931 US-UK Extradition Treaty remains applicable to Ghana. Ghana is
also a party to all the UN narcotics conventions.
IV. US Policy Initiatives and Programs
To support the creation of self-sufficient GOG counternarcotics organizations.
To assist the GOG to improve interdiction efforts.
To reduce Ghana's role as transit point for narcotics.
To implement US Department of State plans to provide commodity assistance to Ghanaian narcotics
authorities.
ISRAEL
I. Summary
Israel remains a drug consuming country, with a growing cocaine, LSD, and amphetamine problem in
addition to already serious hashish, heroin and marijuana usage. There are an estimated 250,000 drug
abusers in Israel, 20,000 of whom are considered addicts. Israel is particularly concerned about drug use
among its increasingly wealthy and well-traveled youth. Efforts to cooperate with neighbors in
interdicting the entrance of drugs continue and have met some success in the case of Jordan. Budgetary
allocations to fight drugs are frozen or falling as the government of Israel focuses on reducing its budget
deficit. Money laundering legislation remains stalled short of the Knesset (Israel's Parliament), leaving
Israel in an increasingly vulnerable position as a target for money laundering by international criminal
gangs, especially from the former Soviet Union.
II. Status of Country
Israel is not a significant drug producer or trafficker. High domestic costs for drugs across the board
suggest that the most profitable market for drugs entering the country is in Israel itself. Although
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significant quantities of narcotics do not transit Israel, the probability is high that large quantities of drug
money and individuals involved in drug dealing do, because Israel has no money laundering law and has
strict bank secrecy regulations. Without a money laundering law--and with Israeli citizens immune by
law from extradition--Israel is a potential haven for drug traffickers, particularly those able to obtain
Israeli citizenship (legally or falsely). However, draft legislation that would provide for the extradition
of Israeli nationals, with the condition that any Israeli national extradited and convicted abroad could be
transferred to Israel to serve the sentence, will soon be introduced in the Israeli Parliament.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Israeli anti-drug policy is set by the Anti- Drug Authority (ADA) and focuses on
reducing both supply and demand. On the demand side, ADA continues to focus efforts on communitybased programs and targeting at-risk groups, particularly Israeli youth. On the supply side, Israel is
working internationally to interdict drugs before they reach Israel's borders and making excellent use of
US-trained drug dogs at points of entry to detect narcotics. Regional cooperation has been slowed
somewhat by the current stall in the Mideast Peace Process, but there still has been some progress with
Jordan on specific cases, and efforts by Israel to focus on other specific cases continue. On the legal
front, the Ministry of Justice is drafting legislation that would make membership in organized crime
organizations illegal.
Accomplishments. 1997 marked the entry into force of the United States-Israel Customs Agreement.
Israel's money laundering legislation continued its slow road to passage, with draft legislation finally
making its way out of the Justice Ministry in 1997 and is now pending government-wide approval
before going to the Knesset.
Law Enforcement Efforts. Israel's program of assigning liaison officers overseas has been an
unqualified success in stemming the flow of drugs into Israel and catching Israeli traffickers operating
internationally. In 1996, for example, the Israel police seized 286 kg. of cocaine destined for Israel-nearly four times the amount actually seized inside of Israel. Israel's Customs interdiction program,
consisting of 50 officers (of a planned 200 person unit), has experienced significant success using canine
and technical detection methods. In the first ten months of 1997, the unit reports five cocaine seizures, 4
ecstasy seizures, 36 cannabis seizures and 13 other drug-related seizures.
Corruption. In early 1997 the Israel National Police (INP) reorganized, in part to focus increased
resources on organized crime (particularly Russian). The Israeli police believe that 40-50 individuals
associated with organized crime are attempting to buy influence in Israeli political circles.
Agreements and Treaties. The US and Israel signed a Memorandum of Understanding (MOU) in 1991
calling for bilateral cooperation to combat illicit narcotic trafficking and abuse, by sharing information,
experience, and training methods. The 1995 Dual Taxation Treaty grants US tax authorities limited
access to bank account information. Negotiations on a mutual legal assistance treaty (MLAT) between
Israel and the US have been recently concluded. It is expected that the Treaty will be among the group
of extradition and mutual assistance treaties scheduled to be submitted to the Senate in March of 1998.
Israel has acceded to the European Convention on Mutual Legal Assistance in Criminal Matters. Israel
signed cooperative agreements with France, Hungary, Italy, Chile, and Turkey. In addition, Israeli law
permits legal assistance in the absence of a treaty. Israel is a party to the 1961 Single Convention and its
1972 Protocol and the 1971 UN Convention on Psychotropic Substances, but has not yet ratified the
1988 UN Drug Convention. Ratification is expected once Israel adopts a money laundering law.
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Israel has extradition treaties with roughly 30 countries, including the United States, the United
Kingdom, France, and Italy. Since 1978, Israeli law has prohibited extradition of its own citizens. Israel
is also cautious about extraditing foreign Jews. Israeli law does, however, provide jurisdiction in Israeli
courts over certain crimes committed by its nationals anywhere in the world. Draft legislation that would
provide for the extradition of Israeli nationals, with the condition that any Israeli national extradited and
convicted abroad could be transferred to Israel to serve the sentence, will soon be introduced in the
Israeli Parliament.
Cultivation/Production. Israel is not currently a significant cultivator or producer of illicit drugs-cultivation certainly falls well below Israeli demand for drugs. The INP does, however, report an
increase in the cultivation of marijuana, though still well under 5000 ha., and in the discovery of smallscale drug labs.
Drug Flow/Transit. Israel is not a significant transit country for narcotics, based on the relatively high
market price that illegal drugs command in Israel, and the seizure experience of the National Police. INP
drug seizure statistics indicate that much of the cocaine, heroin, LSD, and marijuana entering Israel
comes via Europe. The National Police reports no seizures of outward-bound drugs or reports from
around the world of Israel- origin or transited drugs being seized.
Domestic Programs/Demand Reduction. ADA is the lead agency in the struggle to reduce demand for
illegal narcotics. ADA uses a broad range of educational programs, targeting youth and other at risk
groups, including backpackers (a term used for young Israelis that travel to South America and Asia and
tend to have high drug use rates), high school drop outs, and soldiers. In school programming of 10-20
hours per school year, drug education reaches 71 percent of all Arab students and 83 percent of secular
Jewish students in Junior High or High School. 4,500 addicts were treated in Israel's public and private
clinics in 1996.
IV. US Policy Initiatives and Programs
Policy Initiatives. US-Israel cooperation is focused on helping Israel to build a self-sustaining,
professional drug interdiction force, to enact effective anti-drug legislation, and to foster regional
cooperation with Israel's neighbors and the Palestinian Authority on anti-drug issues.
Bilateral Cooperation. The US Drug Enforcement Agency office in Cyprus works closely with its INP
counterparts, while the National Drug Enforcement Section under the Customs Department works with
the US Customs Service. In March 1997, a multi-agency, State Department-led team visited Israel to
discuss Israeli money laundering legislation and explore opportunities for future cooperation and
training related to money laundering and organized crime. In May 1997, the DEA sponsored a week
long asset forfeiture seminar for Israel ADA, Customs, Justice, and police officials.
Road Ahead. Failure to pass money laundering legislation in Israel has delayed cooperation with the US
on Israel's most pressing crime/narcotics related problem. We anticipate that when such a law is passed,
cooperation will expand significantly, with US agencies engaging in significant training as well as joint
cases. US counternarcotics officials will continue their work to expand contacts with the Palestinian
Authority and assist them in developing the anti-drug unit in their civil police force.
JORDAN
I. Summary
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Jordan's geographic location between drug producing countries to the north and drug consuming
countries to the south and west have historically made, and continue to make, Jordan a transit country
for drugs. Jordan does not produce illicit drugs. Drug abuse in Jordan has generally been considered
minor, but recent statements by ranking government of Jordan (GOJ) officials suggest drug use is on the
rise with Jordan having an estimated 30,000 drug users. GOJ seizures of hashish continue to decline
while seizures of heroin have reached an all-time high. Jordan is a party to the 1988 UN Drug
Convention, enforces strict anti-drug laws, and continues to receive cooperation from bordering states in
narcotics interdiction efforts.
II. Status of Country
Jordan continues to be a transit country for hashish, heroin and Captagon pills. Most of the illicit drugs
that transit Jordan originate in Lebanon and Turkey and enter Jordan from Syria. Once in Jordan, the
drugs are often stored before being transported to other countries in the region, primarily Egypt, Israel
and Saudi Arabia. There have been GOJ reports of illicit drugs transiting Jordan to Europe, but there
have been no indications that drugs transiting Jordan go to the United States.
Jordan remains serious about drug interdiction, and considers itself a defense line between producing
and consuming countries. However, it continues to be plagued by a lack of sufficient manpower and
equipment in its interdiction effort. Foreign assistance to combat illicit drug trafficking has dropped off
significantly recently, as existing programs were completed, and new ones were not proposed to replace
them. This might reflect the (inaccurate) perception among donors, other than the US, that with the
success of efforts at crop control in Lebanon, the drug problem has abated in the region.
Jordan's vast desert borders make it susceptible to illicit drug smuggling. The placement of the desert
border police under the jurisdiction of the military has improved drug interdiction in remote locations,
but insufficient modern search techniques and equipment at official crossing points is still a
vulnerability.
Although money laundering is not currently perceived as a problem in Jordan, the GOJ has shown some
interest in pursuing a money laundering law.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The national police, known as the Public Security Directorate (PSD), has increased
the size of the anti-narcotics department by forty officers. Although a welcome increase, this department
has also been tasked with counterfeiting investigations and the investigation of stolen antiquities.
Accomplishments. In 1997, the GOJ had their largest single seizure of Turkish heroin, approximately
30 kilograms, worth an estimated street value of $6 million. This seizure also resulted in the arrest of
narco-traffickers in Jordan and Turkey.
Law Enforcement Efforts. Jordanians are primarily concerned with the transiting of illicit drugs
through their country. In this regard, they have worked closely with neighboring countries, including
Saudi Arabia, Syria, Egypt and Israel. Jordan has made efforts to improve cooperation with Turkey in
counternarcotics matters.
Corruption. There were no reported cases of narcotics-related corruption in 1997. Available evidence
does not indicate that Jordanian officials are involved in narcotics trafficking.
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Agreements and Treaties. Jordan maintains anti-narcotics agreements with Syria, Lebanon, Iraq, Saudi
Arabia, and Egypt. Jordan and the US concluded an extradition treaty in 1995. However, a 1997 ruling
by the Jordanian judiciary has stayed the implementation of this treaty. There have been no narcoticsrelated extraditions nor are there any pending. Jordan is a party to all the UN narcotics conventions.
Drug Flow/Transit. GOJ seizures suggest that the transit of Turkish heroin through Jordan is
increasing.
Domestic Programs. The GOJ is concerned with the growing number of drug users in Jordan and is
seeking measures to combat this trend.
IV. US Policy Initiatives and Programs
US Policy Initiatives. Establishing and maintaining an effective Jordanian interdiction force is the goal
of US-Jordan cooperation. In FY 1997, a State Department-funded narcotics investigation course was
provided by the DEA to the Jordanian Public Security Directorate. In FY 1998, a State Departmentfunded narcotics interdiction course will be provided to Jordanian Customs and the Public Security
Directorate. The USG will continue to encourage Jordan to pursue a money laundering law.
Bilateral Cooperation. The United States and Jordan do not have a bilateral counternarcotics
agreement. However, a DEA liaison officer in Cyprus and officers at the US Embassy in Amman have a
close working relationship with Jordan authorities on narcotics related matters.
Road Ahead. The USG anticipates continued cooperation with Jordan in the anti-narcotics efforts.
KENYA
I. Summary
Kenya is a transit country for hashish and heroin bound for Europe and, to a much lesser extent, North
America. It is a major regional supplier of "Khat", which is a mild chewable narcotic legally cultivated
for export and domestic consumption. Cannabis is also produced for the domestic market. There is a
small but growing domestic heroin market. Kenyan anti-narcotics police cooperate well with US
embassy and drug enforcement officials, and with other nations' law enforcement agencies. Extensive
training in air passenger profiling has helped reduce air-borne heroin shipments. Despite extensive
training, interdiction of sea-borne hashish shipments has been less successful. Efforts to promulgate a
national counter-narcotics strategy stalled in 1997 due to lack of resources and political will. Kenya is a
party to the 1988 UN Drug Convention and has enacted full implementing legislation.
II. Status of Country
Kenya's strategic location, sea and air transport infrastructure, and close commercial and family ties to
India and Pakistan, will continue to make it a significant transit country for South Asian hashish and
heroin. The country is a major producer of Khat (known in Kenya as "Miraa"), which is grown legally
for domestic and foreign markets. Khat is a mild narcotic, used traditionally in Arab countries of the
Arabian Peninsula and certain countries influenced by trade with them. Marijuana is also produced in
commercial quantities for the domestic market.
III. Country Actions Against Drugs in 1997
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Policy Initiatives. The effort to draft a national counter-narcotics strategy stalled in 1997, due to lack of
resources and political will. A new national crime research law, enacted during 1997, may assist
enforcement efforts, by making more reliable statistics available to decision-makers, and by assisting
more efficient allocation of budgetary and operational resources.
Accomplishments and Law Enforcement Efforts. Kenyan police arrested a Dutch citizen who had been
indicted by a US Federal Grand Jury in Florida for smuggling hashish into the US. Kenyan authorities
cooperated closely with the USG to effect his prompt extradition.
Kenya is promoting efforts to enhance East African regional anti-narcotics cooperation. Thanks to a
1996 Kenyan initiative, the Kenyan Criminal Investigations Division (CID) and anti-narcotics directors
of Kenya, Tanzania, and Uganda now meet regularly to exchange operational information. The three
countries have begun joint cross-border operations, and have agreed to begin sharing information on
significant traffickers.
The Kenya police Anti-narcotics Unit (ANU), the main narcotics law enforcement organization,
continues to professionalize. Many ANU officers have undergone training sponsored by the US,
German, British, and other governments. The ANU now has a solid cadre of officers proficient in
profiling suspected drug couriers and/or containers at airports. There have been good results with
profiling at airports, but not yet at seaports. The ANU recently deployed four drug-sniffing dogs, thanks
to a UNDCP training program. The ANU cooperates fully with the USG and other nations on
investigations and other operations. The ANU is building its surveillance capabilities, thanks in part to
USG-donated equipment, but still lacks the capacity to conduct sophisticated undercover operations.
Inadequate resources, a police-wide problem, reduces operational effectiveness.
There are signs that Kenya may have begun to focus more on major traffickers. The ANU recently
apprehended a Kenyan suspected of smuggling hashish to Canada. This individual had been a fugitive
since police seized 5.7 tons of hashish from his house in 1995. Police also tracked to Uganda the reputed
leader of the ring responsible for a 20 ton load of hashish seized near Mombasa in 1996. Ugandan police
have detained the fugitive pending extradition proceedings. The GOK is proceeding with the
prosecution of another Mombasa resident accused of being a major trafficker, despite a very costly and
lengthy trial.
Corruption. Public corruption remains a significant barrier to effective narcotics enforcement,
particularly against major traffickers. Despite Kenya's strict narcotics law, which encompasses most
forms of narcotics-related corruption, unconfirmed reports of public officials involved in narcotics
trafficking continue to surface. As in the previous year, 1997 saw no prosecutions of public officials for
narcotics-related Corruption. The GOK took some administrative steps, including a 40 percent pay
raise for police, and administrative warnings against police involvement with drug trafficking, that may
have some effect in reducing low-level Corruption.
Agreements and Treaties. Kenya is a party to the 1988 UN Convention and enacted the Kenyan
Narcotic Drugs and Psychotropic Substances Control Act as full implementing legislation in 1994 (the
1994 Narcotics Act). The 1931 US-UK Extradition Treaty remains in force between the US and Kenya
through a 1965 exchange of notes. Under a 1991 Memorandum of Understanding (MOU), amended in
1996, the USG donated $40,000 of surveillance and computer equipment to the ANU. The MOU also
provides for sharing of narcotics-related information. The three nations of the East African Cooperation
Group (Kenya, Tanzania, and Uganda), are presently considering a draft protocol designed to enhance
regional anti-narcotics cooperation.
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Cultivation/Production. Cannabis is produced in Kenya for the domestic market, although foreign
tourists export small amounts. Large-scale cannabis cultivation occurs in the Lake Victoria basin, in the
central highlands, and along the coast. During 1997, police destroyed a 70 acre plantation discovered in
a national forest on Mt. Kenya. There is no systematic detection and eradication program, and the GOK
makes no effort to estimate crop size or yield. Khat (Miraa) is legal in Kenya, and is widely grown as a
cash crop in Eastern Province.
Drug Flow/Transit. Kenya is strategically located along a major transit route between South Asian
producers of hashish and heroin, and markets in Europe, West Africa, and North America, but we have
no evidence that such drugs reach this country in quantities sufficient to significantly effect the US.
There are reports that sea container shipments of hashish transit Mombasa's port, where they are
redocumented for onward shipment. Other large, sea-borne hashish cargoes are smuggled into Kenya for
repackaging before being re-exported. Most hashish transiting Kenya is bound for Europe, although
some shipments have reached the US and Canada. Despite recent specialized training from the USG and
other nations, there were no major hashish seizures in 1997.
Heroin normally transits Kenya by air, carried by individual couriers. Their destination is often West
Africa, although some heroin enters Kenya either for re-export directly to Europe or the US, or to supply
the small but growing domestic market. The number of heroin arrests in 1997 kept pace with 1996, but
the quantities seized declined. This may be the result of more effective airport interdiction by the ANU-traffickers continue to dispatch couriers as they probe for weaknesses, but are unwilling to risk large
quantities. We have no evidence that heroin from Kenya reaches the US in quantities sufficient to
significantly effect the US.
Kenyan-grown Khat is legally exported from Kenya to Somalia, Ethiopia, and Yemen.
The ANU intercepted a courier carrying 300 grams of cocaine by air from South America to South
Africa via Europe and Kenya, but this appears to have been an isolated incident. Kenya is also a transit
country for methaqualone (Mandrax) in route from India to South Africa.
Demand Reduction. Kenya has made little progress on Demand Reduction. Marijuana and legal Khat
(Miraa) are the domestic narcotics of choice, but heroin abuse is spreading, particularly in the coastal
region. Apart from a very limited poster campaign sponsored by private donors, and a small UNDCP
pilot project to bring anti-drug education into the schools, there is no significant government
involvement in demand reduction or rehabilitation activities. There are no reliable statistics for domestic
consumption.
IV. US Policy Initiatives and Programs
US Objectives. The principal US objective is the encouragement of a strong Kenyan government
commitment to narcotics interdiction, and the strengthening of its counter-narcotics capabilities.
Bilateral Cooperation. There was solid progress during 1997 on strengthening Kenya's counternarcotics capabilities. In March 1997, the USG donated $40,000 of surveillance and computer
equipment. The State Department provided funding for ANU officers to attend several DEA and US
Customs advanced training programs. Kenya routinely provides samples of seized narcotics to DEA for
laboratory analysis. A US Department of Defense preliminary assessment team discussed training and
technical assistance needs with police and military officials, and several assistance missions are now
under consideration. There was less progress toward encouraging a strong GOK commitment to
narcotics interdiction. Corruption and lack of political will remain significant obstacles.
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The Road Ahead. The USG will continue to take advantage of its good relations with Kenyan law
enforcement to build professionalism, operational capacity, and information sharing. The USG will
encourage progress on a planned national counter-narcotics strategy, and provide input where
appropriate.
LEBANON
I. Summary
Lebanon was removed from the list of major drug-producing and drug transit countries in November
1997 because it is no longer a significant producer of opium, the reason for which it was placed on the
list several years ago. Between 1992 and 1996, the Government of Lebanon (GOL), with cooperation
from the Government of Syria (SARG), eradicated all but approximately 150 hectares of the 3400
hectares of opium identified. Evidence continues to show minimal illicit growth and production of
opium and cannabis in the Bekaa Valley. Law enforcement efforts by the Lebanese Internal Security
Forces (ISF), and reinforced by the Lebanese Armed Forces (LAF) are underway in areas previously
outside the central government's reach. If maintained, these efforts should discourage a re-emergence of
cultivation and trafficking.
In December, the Lebanese Parliament passed a blanket amnesty for drug-related crimes through
December 31, 1995, which appears to place Lebanon in contravention of its obligations under the 1988
UN Drug Convention to punish all forms of illicit drug production, trafficking and drug money
laundering, and raising substantial concerns about GOL commitment to the international anti-drug
effort.
In 1996, the GOL acceded to the 1988 UN Drug Convention but registered formal reservations on
certain provisions, including bank secrecy. The USG expressed its expectation that this reservation will
not undermine the GOL's obligations under this Convention. Draft anti-narcotics legislation is expected
to be debated and passed by the Lebanese Parliament in early 1998 for which the US Government
(USG) provided expertise to facilitate improving the legislation, especially those provisions regarding
money laundering and bank secrecy.
II. Status of Country
Lebanon (along with Syria) were added to the Majors list in the late 1980's because opium production in
the Syrian-controlled Lebanese Bekaa Valley exceeded the threshold limits of the Foreign Assistance
Act of 1961, as amended. Estimates in 1991 identified 3400 hectares being produced in the Bekaa
Valley. In 1992, both governments launched a successful eradication campaign, reducing the amount
cultivated to approximately 150 hectares by 1997 estimates. The cultivation of cannabis, processed into
hashish for primarily non-US markets, was also drastically reduced during the 1992-1996 period,
bringing Lebanon substantially under the legal definition for a Major Producing Country. As a result,
Lebanon was removed from the Majors list this year.
The GOL needs to match its performance in the eradication area with equal commitment to combat the
processing and trafficking of drugs through Lebanese territory. The GOL also must reduce the
vulnerability of its financial institutions for laundering illicitly-derived monies. Lebanon remains a
venue for narcotics processing and transshipment. Opium from Turkey, Afghanistan and Pakistan travels
into northern Lebanon for conversion into heroin. Most of the opium processed into heroin occurs in
small laboratories in the Bekaa Valley that are mobile, well-hidden and thus difficult to detect. Cocaine
from South America also transits Lebanon. Available evidence indicates the most of the drugs transiting
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Lebanon are destined for other countries in the region or Europe.
Drugs transiting Lebanon are primarily destined for other countries in the region and Europe. Drug
routes and the supporting business networks were established long ago and flourished during the war
years in Lebanon. Trafficking is frequently organized around geographically-based clans. These groups
have proved hard to penetrate, and their position as effective regional powerbrokers has discouraged
efforts by a central government focused on reconstruction and internal political battles to curtail their
activities. Much of Lebanon's illicit traffic in drugs, both importation and exportation, takes place
through secondary ports located in or near the geographical bases of these clans.
Reported drug seizures, arrests and convictions of traffickers and users appear regularly in the media.
Official corruption exists, although it is difficult to determine how much is related specifically to
narcotics.
The Lebanese Parliament will be considering a new anti-drug law in early 1998. At the GOL's request,
the USG provided technical expertise to Lebanese authorities for the purpose of strengthening
provisions in the law dealing with money laundering and bank secrecy. At the time of this writing, it
was not clear whether the draft law would expand the list of predicate offenses (beyond drug trafficking)
for criminal money laundering.
On December 18, the Lebanese Parliament passed a blanket amnesty for drug-related crimes committed
through December 31, 1995 (the date the GOL considers the end of a three-year crackdown on drug
cultivation and trafficking). The GOL defended the amnesty by arguing that it was impractical to
maintain over 31,000 arrest warrants for small-time, impoverished criminals. The amnesty also applies
to traffickers now serving time in jail; an estimated 2,000-3000 drug criminals could be released under
this amnesty, which appears to violate Lebanon's obligations under the 1988 UN Drug Convention.
III. Country Actions Against Drugs in 1997
Policy Initiatives. Recent highly publicized efforts by the LAF to control the Baalbek-Hermel area of
the Bekaa are vital for continued suppression of narcotics cultivation and trafficking. Security initiatives
must create an environment permissive to the growth of effective civil and humanitarian programs that
raise income levels, promote education and compliance and reach into isolated and underdeveloped
areas.
Accomplishments. Lebanese enforcement agencies continue to maintain the suppression of illicit
cultivation of opium and cannabis in the Bekaa Valley.
Law Enforcement Efforts. Lebanese authorities deny that significant local processing occurs and offer
to pursue any US law enforcement leads--to the point of tendering an offer for US participation on
search operations. Hashish continues to move across the Syrian/Lebanese border, albeit in greatly
reduced quantities. Heroin and cocaine have been routed through seaports and airports concealed in
cargo containers. A positive development is the improved security at Beirut International Airport (BIA).
Antoine Elias el-Hani, leader of a major and long standing drug ring was arrested in May. The press
reported that his organization had over 100 affiliates scattered around the world. A February 1997
newspaper article reported the arrest in Damascus of female smuggler Fayza Allam. Her revelations led
to the arrest of approximately thirty persons. The arrest and conviction of Ghassan Matriji to five years
imprisonment was also a landmark event. Matriji was well-connected to various influential Lebanese
and Syrian political figures.
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Probably the most promising development is the current expansion of the LAF and ISF into the
Baalbek-Hermel area of the Bekaa. This safehaven for organized criminals harbors narcotics and arms
traffickers, stolen car rings and counterfeiters. Recent army and police actions have led to the seizure of
illegal weapons, drugs and counterfeit notes, multiple arrests and at least one fatal shooting of a drug
dealer.
Money Laundering. The Lebanese Parliament is currently debating draft narcotics legislation that
includes a provision to criminalize drug-related money laundering. At the GOL's request, the USG has
provided suggested modifications to the legislation. There are no formal laws regarding asset seizure.
Precursor chemical control. In June 1995, the GOL restricted the importation and use of acetic
anhydride to prevent its diversion for heroin manufacturing.
Corruption. Corruption remains a problem, although there have been some arrests of public officials.
Agreements and Treaties. There are no bilateral agreements with the United States. Lebanon is a party
to the 1988 UN Convention, with reservations on bank secrecy, and is also a party to the 1961 Single
Convention and its 1972 Protocol, as well as the 1971 UN Convention on Psychotropic Substances.
Cultivation/Production. Small farms that were responsible for most cultivation have been largely
eliminated. However, reports continue that heroin is produced in small, well-hidden laboratories in the
Bekaa Valley from morphine base arriving from Turkey, Afghanistan and Pakistan. There have been no
large seizures of large quantities of opium.
Domestic Programs. Domestic abuse is not a major problem and drug offenders are subject to severe
penalties. There is little in the way of public programs to raise awareness and combat use. There are
some private treatment facilities.
IV. US Policy Initiatives and Programs
US Policy Initiatives. The USG supports stronger GOL law enforcement efforts to maintain the
elimination of opium and cannabis cultivation and to strengthen interdiction activities against drug
trafficking and processing. To this end, the USG provided some training assistance, through a small
ICITAP program, to the ISF, to improve its drug investigation efforts. During 1997, the USG strongly
urged against the drug amnesty enacted by the Lebanese government, warning of its potential impact on
Lebanon's international reputation. In addition, the USG has pressed at the highest levels for passage of
strong anti-drug legislation, especially provisions criminalizing money laundering and modifying bank
secrecy to allow for successful prosecution of money launderers. A US team visited Beirut early in 1997
to identify specific requirements for anti-money laundering laws and regulations, and this visit was
followed by active Embassy involvement in promoting comprehensive anti-money laundering laws. The
USG provided in writing and in person suggested language to broaden money laundering as a criminal
activity and to remove the mantel of bank secrecy in money laundering cases. The Lebanese Parliament
is scheduled to debate and pass this legislation during the first quarter of 1998. However, the GOL has
told us it is unlikely the pending law will affect the status of bank secrecy. If that is the case, following
progress on this legislation will be a key foreign policy issue in 1998.
Bilateral Cooperation. There are no bilateral narcotics agreements. DEA and the Embassy narcotics
officer work closely with cooperative GOL counterparts. INL has funded a small ICITAP training
program to upgrade and professionalize anti-drug police operations.
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Road Ahead. The virtual elimination of opium cultivation cannot be assumed to be permanent, and we
must continue working with the Lebanese to lock in success. The US will continue to take appropriate
actions to encourage the GOL to enact effective anti-money laundering laws in full compliance with
international standards and norms. The US will monitor Lebanese commitment to international antinarcotics standards in light of its amnesty program and intensify it current scrutiny of drug transit in
Lebanon in connection with next year's development of the Majors list.
MOROCCO
I. Summary
Morocco is a major producer of cannabis and exporter of hashish. Although statistics vary widely, it is
estimated that over 2,000 metric tons are exported yearly to Europe, where it is consumed as hashish;
shipments to the US are not significant. In recent years, considerable international publicity has
highlighted Morocco's status as one of the world's primary producers of cannabis. To combat this
negative publicity, the Moroccan government continued to devote significant resources to interdiction
efforts. Despite on-going government efforts to disrupt hashish trafficking networks in Morocco,
producers and large-scale traffickers continue to operate. Part of the problem is budgetary constraints
and uneven pursuit and punishment of traffickers. Between late June and early July, the Moroccan
government seized Apx. six metric tons of cocaine, destined for Spain. The cocaine washed ashore after
being dumped from a boat which had experienced engine problems. A police investigation into the
matter continues.
II. Status of Country
Morocco is among the world's largest producers of cannabis. Its cultivation and sale provide the
economic base for much of northern Morocco, where up to 85,000 hectares are devoted to cannabis
production. Most of the cannabis produced in Morocco is processed into hashish, resin, or oil and
exported to Algeria, Tunisia, and Europe. Estimates of the share of the crop consumed domestically
range from 15 to 40 percent.
Hashish from Morocco is most frequently smuggled to Spain, Portugal, and France by sea, then by road
to other countries in Europe. Hashish is also transported from Morocco to Spain on small Mediterranean
fishing boats or on larger vessels via the Canary Islands. Speedboats are also reportedly used by
traffickers to smuggle hashish from Morocco to Gibraltar. Spain remains the main gateway for
Moroccan hashish entering Europe. European authorities report that between 70 to 80 percent of all
hashish seized on the continent is of Moroccan origin.
While cannabis (known locally as kif) is the traditional drug of choice for Moroccans, there is also a
small but growing domestic market for harder drugs, such as Asian heroin and South American cocaine.
In addition, these drugs reportedly enter Morocco for transshipment to Europe. Newspaper reports on
Morocco's role as a major producer and exporter of drugs allege a connection between local drug
traffickers and international cartels such as Latin American cocaine rings. Despite the seizure of Apx.
six tons of cocaine that washed ashore in June/July, suggesting such a connection, no other evidence has
yet arisen that points to a link between Moroccan and Latin American smuggling rings.
There are few barriers to laundering proceeds from narcotics exports, either in Morocco or from a
Moroccan base to other lax centers. The government of Morocco's efforts to trace drug or contraband
money are seriously handicapped by the fact that there are no laws against money laundering that would
allow it to prosecute offenders effectively. In Morocco, much of the revenues of drug traffickers are
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invested in real estate, especially in northern Morocco, where drug money is an important source of
income and has supported a construction boom. However, as increasing numbers of office and apartment
buildings sit unoccupied, drug traffickers are reportedly casting about for new investment opportunities.
III. Country Actions Against Drugs in 1997
Policy Initiatives. The government's 1996 "clean-up" campaign to combat corruption, contraband and
drug smuggling resulted in little significant action against producers, although a number of drug
traffickers arrested during the campaign remain in jail. The development agency for the northern
territories, which produced an action plan for economic development and crop substitution, planned to
use funding promised by the European Union and others to finance its programs, but the GOM has not
met EU requirements which would allow the funds to be released. In January 1996, the GOM created a
coordination unit for the struggle against drugs (UCLAD) which, as part of the Ministry of Interior, is
charged with coordinating anti-drug efforts. While UCLAD has begun to coordinate the actions of
Moroccan government agencies to combat drug trafficking, it lacks any operational capability, resulting
in few tangible results. In 1996, the last year for which figures are available, the Moroccan government
seized almost 40,000 kilos of cannabis and 7,000 kilos of cannabis resin. The government also arrested
18,794 Moroccans and foreigners for drug offenses.
Agreements and Treaties. Morocco is a party to the 1988 UN Drug Convention, the 1961 UN Single
Convention and the 1971 UN Convention on Psychotropic Substances. Since 1989 it has also had an
agreement with the United States pledging joint cooperation in fighting drug trafficking and production.
While Morocco's parliament has not yet passed legislation to implement the 1988 UN Drug Convention,
its laws do provide general authority to prosecute drug producers and traffickers. In 1993, Morocco
ratified a mutual legal assistance treaty with the United States. No narcotics-related cases have yet been
considered under the treaty. In 1989, Morocco and the US signed a bilateral narcotics cooperation
agreement in compliance with the Chiles' amendment which calls for cooperation in the fight against
illicit production, trafficking, and abuse of narcotics. Morocco also has anti-narcotics and/or mutual
legal assistance treaties with the EU, France, Spain, Germany, Italy, Portugal and the UK.
Law Enforcement Efforts. As part of an anti-drug initiative launched by King Hassan in 1992, 10,000
police were detailed to drug interdiction efforts in the north and Rif Mountains in 1995. Two hundred
checkpoints are scattered throughout the region. Soldiers staff hundreds of observation posts along the
Mediterranean coast, and the navy carries out routine sea patrols and responds to sightings by the
observation posts. In addition, Morocco expanded its cooperation with European law enforcement,
increasing the number of foreign drug enforcement officers working with their Moroccan counterparts.
Corruption. Most observers believe that corruption in Morocco continues to be widespread. The
government of Morocco does not promote drug production or trafficking as a matter of policy, and it
contests accusations that government officials in the northern territories are involved in the drug trade.
Accomplishments. The GOM's announced programs would, if fully implemented, bring it substantially
into compliance with the UN Convention's goals and objectives. However, progress in fully
implementing counternarcotics programs was minimal in 1997. The government's purpose in creating
UCLAD was to improve cooperation and centralize control on all drug-related matters. However,
diplomats from Europe, the region most affected by the situation in Morocco, believe the operation lacks
the resources to fulfill its mandate. The EU will continue to withhold anti-narcotics assistance until
UCLAD is fully operational. Absent greatly increased funding, the aims of the UN Convention will
remain unattainable in Morocco.
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Cultivation/Production. Most Moroccan cannabis is cultivated by small farmers in the northern or Rif
region, although some is also grown in the Souss Valley of the south. Unofficial sources estimate that
between 80,000-85,000 hectares are devoted to cannabis production, and claim that this number has
increased by a factor of ten in the last decade. The average hectare of cannabis produces 2 to 8 MT of
raw plant. The government of Morocco has stated that it is committed to the total eradication of cannabis
production. Given the economic dependence of the northern part of the country on cannabis--cannabis
crops are estimated to yield two billion US dollars in revenues annually--eradication is only feasible if
accompanied by a highly subsidized crop substitution program. Consequently, the GOM has not yet
made a serious attempt at eradication.
Drug Flow/Transit. There are reports that Morocco is used as a transshipment point for hard drugs such
as heroin and cocaine entering Europe. In late June and early July 1997, Moroccan police and
gendarmerie officials seized Apx. six tons of cocaine that was discovered to have been dumped by the
crew of a boat which developed engine trouble in seas off Morocco. According to the Moroccan
government, the crew revealed that the boat's destination was Spain. The boat sailed from Southampton,
UK, via the Moroccan port of Agadir, to take high seas delivery of the cocaine for transshipment to
Spain.
Domestic Programs (Demand Reduction). The GOM does not acknowledge a significant hard drug
addiction problem and does not actively promote reduction in domestic demand for hashish. It has
established a program to train the staffs of psychiatric hospitals in the treatment of drug addiction.
IV. US Policy Initiatives and Programs
US Policy Initiatives: Only very small amounts of narcotics produced in, or transiting through Morocco
reach the United States. The goals of US policy are to encourage Moroccan anti-narcotics efforts; to
cooperate with Moroccan law enforcement officials in curtailing production and transshipment of drugs;
to provide training in law enforcement techniques; to promote GOM adherence to bilateral and
international agreement requirements; to provide support, as appropriate, for existing MoroccanEuropean cooperation in this area; and to encourage greater international cooperation to control
Moroccan production and export of drugs.
Bilateral Cooperation. Pursuant to the 1989 agreement, the US and Morocco maintain contact on antinarcotics issues. The US has provided training and anti-narcotics intelligence where applicable, and
conducted regional drug interdiction training in Morocco in December, 1997.
The Road Ahead. The US will continue to monitor the narcotics situation in Morocco, cooperate with
the GOM in its antinarcotics efforts, and, together with the EU, provide law enforcement training,
intelligence, and other support where possible.
[end of document]
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International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
CHEMICAL CONTROL
Introduction
Chemical diversion control is a straightforward counternarcotics strategy: regulate trade in the chemicals
most necessary for drug manufacture to ensure that only transactions for which a legitimate end-use has
been established are permitted to proceed, thereby preventing chemical diversion from licit trade to
illicit drug manufacture.
Chemical control is complicated, however, by the nature of the chemicals involved and the widespread
international commerce in them. Most have many commercial applications and are available from
alternative source countries. National control systems alone cannot prevent diversion.
Furthermore, this is a strategy to prevent a crime. It requires the examination of proposed commercial
transactions, the bulk of which are legitimate-an examination that requires chemical traders and
manufacturers to provide commercial information to the exporting country authorities. And at least a
portion of this information must be shared with other governments to ascertain the legitimacy of the
proposed end-use, and to prevent traffickers from turning to alternative chemical source countries when
transactions in one country are denied.
The challenge is to develop multilateral mechanisms for the exchange of the information necessary for
the effective implementation of national chemical control regimes, taking into account the commercial
interests involved and the varying commercial and law enforcement practices of the many governments
that must cooperate. In 1997, we made considerable progress in developing informal and formal
procedures to achieve this goal.
A second challenge is to promote the establishment of effective national chemical control regimes that
are consistent with and reinforce these multilateral cooperative mechanisms.
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International Framework for Chemical Control
The need for chemical control has been internationally accepted. Article 12 of the 1988 United Nations
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988 UN
Convention) establishes the obligation for parties to the Convention to control their chemical commerce
to prevent diversion to illicit drug manufacture. The Annex to the Convention lists now 22 chemicals as
those most necessary to drug manufacture and, therefore, subject to control.
In 1990, the Inter-American Drug Abuse Control Commission of the Organization of American States
(CICAD) approved model regulations for the control of drug-related chemicals which set a high
standard for government action. The model regulations have been recently amended to cover all the
chemicals included in the 1988 UN Convention.
In 1991, the Chemical Action Task Force (CATF), mandated by the Group of Seven Industrialized
Nations and chaired by the US, developed practical recommendations for governments to consider in
enacting national laws and regulations to comply with the chemical control obligations of Article 12 of
the 1988 UN Convention. The CATF noted that international cooperation between enforcement and
regulatory agencies is essential to the effective implementation of the national laws and regulations.
Information exchange to verify the legitimate end-use of proposed transactions in regulated chemicals is
the key element of this cooperation.
Diversion Methods
Traffickers use the following methods, exploiting the noted legal and regulatory weaknesses, to
circumvent national chemical control laws and regulations:
1. Chemicals are diverted to illicit drug manufacture from domestic chemical production. This requires
the capacity to manufacture the needed chemicals coupled with poor domestic controls on them.
2. Chemicals are imported legally into the drug-producing country with an official import permit and are
subsequently diverted. In this case, the importing country does not adequately investigate the legitimate
end-use of the chemicals before issuing the import permit, and the exporting country makes no
independent effort to ensure legitimate end-use, accepting the import permit at face value.
3. Chemicals are imported into a neighboring country, diverted, and smuggled into the drug-producing
country. This occurs due to lax border controls and inadequate efforts by the chemical source and
conduit countries to determine legitimate end-use before authorizing the shipment and import.
4. Chemicals are manufactured in one country, diverted from domestic commerce, and smuggled into
neighboring drug-producing countries. Inadequate internal controls and weak border security make this
type of diversion possible.
5. Chemicals are shipped to countries or regions where no systems exist to control precursor and
essential chemicals. This occurs because some chemical source countries do not insist that exports of
these chemicals be only to countries that have in place viable, country-wide regulatory systems.
All these methods are embellished, or masked, by the use of front companies, false invoicing,
mislabeling, multiple transshipments, bribery, use of free trade areas, and any other device that will
conceal the nature of the product or the ultimate recipient and facilitate the transaction. Also, as
authorities implement measures to prevent diversion by one method or from one source, traffickers react
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by shifting among diversion methods and source countries. Smuggling continues to increase in response
to international cooperation among enforcement authorities to enhance the effectiveness of controls over
import and export transactions.
Recycling of solvents is another tactic used by some traffickers to reduce the impact of international
chemical controls. The process involves either distillation or a filtration/drying method to remove waste
products from solvents. Recycling cannot be used for acids, alkaline materials or oxidizing agents, the
other types of chemicals used in cocaine processing. The extent of solvent recycling is unknown, but it
cannot be utilized until the solvents have been diverted using one of the methods noted above. The result
is to "multiply" the impact of the initial diversion.
1997 Chemical Diversion Trends
Increasing concern, particularly in Europe, Asia and the US, over the growing abuse of amphetaminetype-stimulants (ATS) focused international attention in 1997 on preventing the diversion of their key
precursor chemicals, ephedrine and pseudoephedrine. One result was a wide ranging discussion of the
issue during a July 7-9, 1997 meeting of the United Nations Commission on Narcotic Drugs preparing
for the June 1998 United Nations General Assembly Special Session on Narcotics. The July meeting
drafted a comprehensive paper detailing measures governments should take to control ATS and their
precursor chemicals. The paper will be considered by the June 1998 Special Session.
On the operational level, cooperation in preventing the diversion of ATS precursor chemicals is
growing. India continues voluntarily to advise DEA of any proposed export transactions in ephedrine
and pseudoephedrine and will not authorize shipment until it receives DEA confirmation that it has no
adverse information on the intended consignee.
China has become proactive in chemical diversion investigations and multilateral cooperative efforts in
diversion investigation and diversion control.
Hong Kong has established a sound system of chemical control, and is making important contributions
to stemming the diversion of ephedrine to methamphetamine manufacture in Mexico.
Mexico is directing increased regulatory and investigative resources to deal with major chemical
smugglers and methamphetamine traffickers, particularly the Geraldo Alvarez and Amezcua
organizations.
The importance of this type of cooperation was demonstrated by the results of an investigation following
a July 1996 seizure by Mexican authorities of over two and a half metric tons of ephedrine in Pantaco,
Mexico. The investigation conducted in late 1996 and 1997 established that this shipment, originally
brokered by US-based Chinese nationals, was produced in China, mislabeled in Hong Kong, and
transshipped through Long Beach, California to Mexico. The Geraldo Alvarez organization was the
intended recipient of the chemicals. As a result of the investigation, Hong Kong authorities have charged
and fined the broker for the shipment, as well as the Hong Kong exporter. A US federal investigation is
pending against the US-based participants. And pursuant to a US federal indictment and provisional
arrest warrant, Alvarez has been placed in custody by Mexican authorities, and his extradition to the US
has been requested.
Due to the increased emphasis on controlling ephedrine and pseudoephedrine, DEA has observed
increased trafficking and diversion of phenylpropanolamine (PPA), a precursor chemical used to
synthesize amphetamine. PPA is being diverted internationally in a manner similar to that used in the
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past for ephedrine and pseudoephedrine. PPA is a List I chemical under the US Controlled Substances
Act, which also includes ephedrine and pseudoephedrine, and it is included in the chemicals controlled
by the CICAD model chemical regulations. The USG is requesting that PPA be added to the list of
chemicals subject to control under the 1988 UN Convention.
1997 Chemical Control Developments
The USG continued in 1997 to pursue informal and formal mechanisms to promote the information
exchange necessary for chemical control, to support training and technical assistance programs to
encourage and enable governments to establish national chemical control regimes, and to improve
chemical diversion investigation cooperation with key chemical source and drug manufacturing
countries.
The information exchange efforts are concentrated on the major chemical source countries, since
stopping suspect shipments before they leave the exporting state is the best way to prevent subsequent
diversion. Training and assistance is going to those who most need it, including drug-producing
countries where diversion is occurring.
Multilateral Chemical Reporting Initiative (MCRI): Informal mechanisms have proven the best vehicle
for the information exchange required for effective chemical control. Formal bilateral agreements
normally cover only trade between the parties and frequently preclude information exchange beyond the
parties. Informal mechanisms allow participation by more governments, to the extent that they are able
and willing.
The MCRI is a USG initiative to promote that participation. It was launched in two 1997 meetings, cohosted by DEA and the European Commission, and attended by officials of the most important chemical
source countries. The objectives of the meetings were to gain agreement that information can be
exchanged between enforcement and regulatory agencies on a voluntary, informal basis; that this is the
best way to achieve the widespread participation effective international chemical control requires; and
that exchanges in this manner will not jeopardize commercial confidentiality. The final objective of the
meetings was to develop common procedures for the information exchange.
The outcome of the 1997 meetings was a strong consensus in support of the MCRI concept, but
lingering concerns were voiced by some countries over the need for formal instruments to govern
information exchange. Generally, countries in which chemical control is considered a law enforcement
issue, and administered by law enforcement agencies, have been most supportive. Countries where
chemical control is considered a regulatory issue, and administered by trade and commerce agencies,
have been more cautious.
In 1998, DEA will be implementing the MCRI by providing and requesting information from meeting
participants, and inviting them to cooperate to the extent their national law enforcement and commercial
practices permit. We expect momentum to pick up as the valuable contribution of the system to the
effective implementation of national chemical control regimes, and its ability to maintain the
confidentiality of information exchanged solely for the purpose of enforcing national chemical control
laws, are demonstrated.
US/EU Chemical Control Agreement: Chemical control within the European Union is a "Community"
matter governed by two European Council regulations which Member States enforce through national
laws and regulations. This provides a uniformity of chemical control procedures and made it
advantageous for the USG to negotiate a formal chemical control agreement with the European Union
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that would facilitate chemical control cooperation with all Member States.
The agreement was signed on May 28, 1997. In the negotiations, we were able to agree on the key point
that our joint chemical control problem is not diversion from trade between the US and EU Member
States, but rather from our chemical trade with third countries. Therefore, the US/EU agreement
contains important provisions for the sharing of information on proposed transactions with third
countries to verify their legitimacy.
The agreement established a "Joint Follow-up Group" which met for the first time in Brussels in
November 1997. At this meeting practical procedures were established for implementing the agreement.
The second Follow-up Group meeting is scheduled for June 1998 in Washington to review and refine
these procedures based on the experience that has been gained in their implementation.
Other International Initiatives
The United Nations International Narcotics Control Board (INCB) has continued to provide invaluable
support to initiatives to improve multilateral cooperation in chemical control. The INCB Secretariat
provided expert advice to the two 1997 MCRI meetings and strong support for the concept of the
initiative. It will have an important role in facilitating its implementation.
Chemical diversion training and technical assistance programs of the United Nations International Drug
Control Program (UNDCP) are providing valuable assistance to Bolivia and the countries of South and
Southwest Asia in establishing the legal and regulatory infrastructures required for chemical control and
training the personnel to implement them.
The Inter-American Drug Abuse Control Commission (CICAD) of the Organization of American States
(OAS) has developed a program - the "Monitoring System for the Control of Precursors and Other
Chemical Substances Used in the Production of Illicit Drugs" - to assist countries in their
implementation of national chemical control laws and regulations. Using mathematical models, the
system can estimate the quantities of these chemicals that are required for domestic industrial use and,
beyond these quantities, what portion of the excess is liable for diversion to the production of illicit
drugs. The system has been used in one OAS Member State to positive reviews and will be used in
others in the future.
Country Reports
Country reports have been prepared on the major source countries for chemicals used in the manufacture
of illicit narcotics. The countries in this section are those with large chemical manufacturing and trading
industries that have significant trade with drug-producing regions, and those considered to be sources of
chemicals diverted from domestic production or imports for local illicit drug manufacture or for
smuggling into neighboring drug-manufacturing countries. Many other countries manufacture and trade
in precursor chemicals, some of which are diverted to illicit drug manufacture, but they are not now
considered major source countries. These designations are reviewed annually.
Because of the important role drug-manufacturing countries have in narcotics chemical control, a
separate section summarizes the status of chemical control efforts in the countries where chemicals are
diverted to significant illicit cocaine and heroin manufacture.
The 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances (1988 UN Convention) is the major instrument for international cooperation in chemical
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diversion control. It includes provisions for maintaining records of transactions on the 22 precursor and
essential chemicals listed in the Annex to the Convention.
Major Chemical Source Countries
Europe
Chemical diversion control within the European Union is regulated by two European Community (EC)
regulations binding on all 15 Member States. The first regulation, issued in 1990, meets the chemical
control provisions of the 1988 UN Convention. The second regulation, issued in 1992, amended the first
to incorporate the more comprehensive recommendations of the G-7 Chemical Action Task Force. The
EC regulations include provisions for record keeping on transactions in the chemicals listed in the 1988
UN Convention, require a system of permits or declarations for exports and imports of regulated
chemicals, and authorize governments to suspend chemical shipments. EU member states implement the
regulations through national laws and regulations.
The EC regulations govern the regulatory aspects of chemical diversion control. Member States remain
responsible for the criminal aspects, investigating and prosecuting violators of the national laws and
regulations implementing the EC regulations.
The US/EU Chemical Control Agreement, signed May 28, 1997, provides the formal basis for US and
EU Member State cooperation in chemical control. Many EU Member States have also supported the
Multilateral Chemical Reporting Initiative promoting chemical control cooperation with a larger number
of countries.
Germany and The Netherlands are the two European countries with the largest chemical manufacturing
sectors and the most significant trade with drug producing areas.
Germany is the world's largest producer of pharmaceuticals, and the large German chemical industry
produces and/or trades in virtually all types of precursor and essential chemicals.
German authorities make a concerted effort to prevent the diversion of these chemicals to illicit drug
manufacture. Germany is a party to the 1988 UN Convention and it has implemented the EC chemical
regulations which meet the chemical control provisions of the Convention.
German law enforcement agencies have the primary responsibility for implementation of the country's
chemical control laws. This facilitates the excellent US/German cooperation in this area, on both the
informal and formal levels. Cooperation on the informal level is already well established. On the formal
level, as an EU Member State Germany is a party to the US/EU Chemical Control Agreement which
will provide a formal basis for cooperation.
The Netherlands
The Netherlands is a major chemical manufacturing and trading country. The Government of the
Netherlands (GON) has strong programs to prevent chemical diversion. A party to the 1988 UN
Convention, it has laws and regulations based on the European Community regulations which meet the
chemical control provisions of the Convention.
Cooperation between US and Dutch enforcement agencies in chemical control, which has been good,
should become even
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better with the implementation of the US/EU Chemical Control Agreement. Increased information
exchange in advance of approving transactions of regulated chemicals is particularly important. GON
authorities have authorized exports of controlled chemicals based on import licenses from importing
countries where chemical control procedures are not adequate. Access to information available from
other countries, through the US/EU Chemical Control Agreement and the Multilateral Chemical
Reporting Initiative, will give Dutch authorities more complete information to make their determinations
to authorize or deny shipments.
Latin America
Argentina has a large and well-developed chemical industry which manufactures most of the chemicals
used in illicit drug manufacture. Domestic illicit drug manufacture is limited to small amounts of
synthetic drugs, but the size of the Argentine chemical industry, the open domestic market and a largely
unpatrolled border with Bolivia make it a source of chemicals for cocaine processing in that country.
Argentina is party to the 1988 UN Convention, and a 1989 law meets the Convention's requirements for
record keeping and reporting, import and export licensing, and the authority to suspend shipments. A
1991 Presidential Decree requires that all manufacturers, importers and exporters of precursor and
essential chemicals (and certain pharmaceutical drugs) be registered with the Secretariat for Prevention
of Drug Abuse and Trafficking (SEDRONAR). In 1996, another Presidential Decree expanded this to
include distributors.
Problems exist in implementation of the laws and decrees in areas such as follow-up investigations and
penalties for non-compliance. The Government of Argentina has recognized these problems and has
begun efforts to improve operations. Argentine authorities do share the chemicals records they have with
US law enforcement authorities in the course of normal law enforcement cooperation. However, DEA
no longer has a chemical diversion investigator assigned to Argentina.
Brazil is South America's largest chemical producer. Its remote western Amazon region shares borders
with South America's three largest cocaine producing countries, Colombia, Peru and Bolivia. The
coincidence of large quantities of available chemicals and the practical difficulties of controlling a long,
sparsely populated western border make Brazil a prime potential source for the chemicals necessary for
cocaine manufacture. There is also some domestic manufacture of illicit synthetic drugs.
Brazil is a party to the 1988 UN Convention. It has laws placing 11 chemicals under some controls,
including, for transactions above the minimum threshold of half a liter or 400 grams, reporting and
record keeping, and import and export licensing. There are substantial administrative penalties,
including seizure and fines, for non-compliance. Manufacturers, distributors, importers, exporters,
recyclers, and pharmacies are subject to the law and pay a registration fee, 80 percent of which is
destined for the National Drug Fund for use by police agencies for chemical control and drug law
enforcement.
The chemical control laws appear to be well complied with by legitimate registrants. A lack of
resources, however, limits follow-up and verification of the legitimate end-use of many shipments.
US and Brazilian authorities have traditionally cooperated, including information sharing, on chemical
control within the context of the US/Brazil counternarcotics agreement. In 1997, Brazil participated
effectively in the two meetings launching the Multilateral Chemical Reporting Initiative (MCRI), and
we expect information sharing to expand within the context of the MCRI in 1998.
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Mexico has major chemical manufacturing and trading industries that produce or import most of the
chemicals necessary for illicit drug manufacture. It has been an important entry point for European and
Asian ephedrine and pseudoephedrine used in Mexico and smuggled into the US for the manufacture of
methamphetamine.
In 1997, Mexico significantly improved its legislative base for chemical control with the unanimous
passage of a chemical control law that brings the country into compliance with the chemical control
provisions of the 1988 UN Convention, to which it is a party. The law provides for government
regulation of all activities involving the production, preparation, transfer, acquisition, import, export,
transportation, and distribution of the chemicals included in the Convention. Records must be
maintained for three years on all transactions in these chemicals. Criminal penalties for chemical
trafficking were already in place; the new law includes civil penalties for failure to comply with the
record keeping or regulatory requirements. The challenge now will be the effective implementation of
the new law.
The US and Mexico cooperate formally in chemical control through a Bilateral Chemical Control
Working Group, which provides a forum for information sharing. At the July 1997 meeting of the
United Nations Commission on Narcotic Drugs acting as a preparatory body for the June 1998 United
Nations General Assembly Special Session on Narcotics, the US and Mexico also collaborated in
drafting a comprehensive chemical control document to be considered by the Special Session. Mexico
also attended one of the two 1997 meetings launching the Multilateral Chemical Reporting Initiative and
is expected to participate in the system.
Asia
China has a major chemical industry. In 1997, the government took important steps to increase its ability
to prevent diversion from it. A party to the 1988 UN Convention, China has laws and regulations
meeting its provisions for record keeping and reporting, and import/export controls for the 22 chemicals
listed in the Convention. In March 1997, the penalties for illegally trading in these chemicals were
significantly increased. In Yunnan Province, which shares a long, largely open border with Burma, a
new provincial law placed controls on 28 chemicals to stem their diversion across the border for heroin
and methamphetamine manufacture.
Enforcement was also stepped up resulting, in the first ten months of 1997, in the seizure of 300 metric
tons of illegally traded drug-essential chemicals, a fourfold increase over 1996.
China has supported multilateral and bilateral US/Chinese initiatives to improve international
cooperation in chemical control. It participated in the two 1997 meetings to launch the USG-initiated
Multilateral Chemical Reporting Initiative and has indicated it intends to participate actively. A direct email link has been established between DEA Headquarters and the National Narcotics Control
Commission in Beijing for the exchange of chemical and other drug control information. DEA also
conducted two chemical control training courses in 1997 for provincial officials in Northeast and
Southwest China.
India has a large chemical industry producing significant quantities of key drug-essential chemicals,
particularly acetic anhydride used in heroin manufacture, N-acetylantranilic acid used for the
manufacture of the synthetic drug methaqualone, and ephedrine and pseudoephedrine used in the
manufacture of amphetamine and methamphetamine. The Indian Government has taken important
measures to prevent the diversion of these chemicals to the illicit manufacture of the drugs noted.
However, India, although a party to the 1988 UN Convention does not have legislation meeting all the
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Convention's chemical control provisions, or covering all 22 chemicals listed in its annex.
Located between the heroin producing regions of Southeast and Southwest Asia, India is a natural
magnet for traffickers seeking acetic anhydride, usually by smuggling domestically procured acetic
anhydride across the country's eastern and western borders. To counter this, the government has
implemented strict control measures over acetic anhydride near the Indo-Burmese and Indo-Pakistani
borders.
The Government is also increasing cooperation with industry to prevent chemical diversion. A voluntary
code of conduct has been established which is aiding enforcement efforts. The Indian Narcotics Control
Board noted that seizures of illegal drug-essential chemicals declined in 1997, apparently because of
reduced availability.
Indian authorities cooperate closely with DEA in controlling ephedrine and pseudoephedrine. They
notify DEA of significant export shipments, and will not authorize shipment until they receive DEA
confirmation that it has no adverse information on the intended recipient. Cooperation and information
sharing on other chemicals is also good and it should increase since India participated in the two 1997
meetings launching the Multilateral Chemical Reporting Initiative and has been an active supporter of it.
Major Cocaine and Heroin Producing Countries With Significant Chemical Diversion
Latin America
Bolivian traffickers depend on chemicals smuggled from neighboring countries-Argentina, Chile, and
Peru-or chemicals diverted from legal imports to meet most of their requirements. The exceptions are
some sulfuric acid and ether which traffickers in the Santa Cruz area are able to produce in limited
quantities.
Bolivia is a party to the 1988 UN Convention and has the legal basis for implementing its provisions.
Faced with the smuggling threat, Bolivian law enforcement officials have established close cooperative
arrangements with their Chilean counterparts, but lack similar relationships with other source countries.
Although there have been extensive talks with Argentina, no firm working relationship has been
established.
Bolivia's chemical police, GISUQ, have offices in the country's four major cities. In 1997, seizure rates
for every chemical on the controlled list surpassed 1996 levels, but ample supplies are still available to
traffickers. Some of the seizures resulted from joint Bolivian/US interdiction and law enforcement
efforts.
The regulatory agency created to monitor the importation of drug-essential chemicals and to prevent
their diversion has suffered management problems, and has not yet been able to establish an accurate
national data base, an enforceable licensing system or an effective enforcement mechanism. However, it
achieved some notable successes in identifying and prosecuting violators in the Santa Cruz area.
Colombia is a party to the 1988 UN Convention and Colombia's Public Law 30 of 1986 and subsequent
resolutions meet or exceed the provisions of the Convention. The list of regulated chemicals is more
extensive than those in the Convention and there are requirements for record keeping and reporting, and
import and export authorizations. The government has the authority to deny such authorizations.
Poor implementation of the chemical control laws has allowed Colombia to continue as the world's
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leading producer of cocaine and an important producer of heroin. Most of the chemicals for this
production are imported into the country with valid import licenses and subsequently diverted. Lesser
amounts are smuggled in from Venezuela and Brazil.
Because of the weakness in the import licensing system, DEA, since March 1996, has required US
exporters of controlled chemicals (and transshippers through the US) to affirmatively establish the
legitimate end-use of each shipment-a requirement not imposed on exports to other countries. Since
then, there have been only two exports, both authorized, from the US to Colombia of regulated
chemicals.
Peruvian law meets the chemical control provisions of the 1988 UN Convention, to which the country is
a party. Record keeping and reporting on the chemicals included in the Convention are required, a
system of permits and declarations for imports exists, and the government has the authority to seize and
suspend shipments.
Cocaine base is Peru's major drug product and export. Most of the chemicals required for its
manufacturer are produced domestically and diversion from domestic chemical production is an
important source for traffickers. The Government is making a major effort to counter this. A 1992
government decree identified thirteen chemicals used in cocaine processing as subject to the same
penalties applicable to trafficking in cocaine.
These and other chemical control laws are implemented by a chemical control regime DEA considers
one of the best in Latin America. The police make frequent chemical seizures. In particular, the riverine
interdiction program has been effective in stopping chemical shipments to remote cocaine processing
sites. Peru has also cooperated with its neighboring countries in drug and chemical interdiction.
Asia
Afghanistan. Law enforcement action in Pakistan has pushed heroin production across the border into
Afghanistan, making that country Southwest Asia's largest heroin producer and significantly
compounding the chemical control problem. Chemicals diverted in Pakistan are easily smuggled across
the border to supply the heroin labs, but large quantities of drug-essential chemicals also reportedly enter
the country from Central Asia, Europe and India. There is no indication that any effort has been made by
any of the factions in Afghanistan to stop these shipments.
In the absence of an effective authority in Afghanistan, the United States is working with other countries
to stop the shipments. For example, the Government of the United Arab Emirates in 1997 stopped two
large shipments of acetic anhydride in transit to Afghanistan based on information provided by DEA and
the International Narcotics Control Board.
Burma is the world's largest producer of heroin and an increasingly significant producer of amphetamine
and methamphetamine. All require chemicals, and lacking adequate domestic sources, the chemicals are
usually smuggled from abroad. The primary source countries have been China and India, both of which
have industries producing the needed chemicals, and remote, porous borders with Burma. Thailand is a
lesser source of acetic anhydride, a key heroin essential chemical.
Burma is a party to the 1988 UN Convention and has laws and regulations implementing the
Convention's key chemical control provisions. However, weak implementation, and the practical
difficulties of enforcement in remote drug-producing areas, mean traffickers continue to obtain the
chemicals they require. In 1997, seizures of acetic anhydride declined by 62 percent to 1938 gallons.
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In May 1997, the Government of Burma and five other governments (Cambodia, China, Laos, Thailand,
and Vietnam) signed a memorandum of understanding sponsored by the United Nations International
Drug Control Program for a sub-regional action plan aimed at controlling chemicals and reducing illicit
drug use in the highlands of Southeast Asia.
Turkey. Significant quantities of opium are processed into heroin in Turkey. The country is not a major
producer of precursor and essential chemicals, and the bulk of the chemicals for heroin processing are
smuggled into the country or diverted from legal importation.
Turkey is a party to the 1988 UN Convention but does not have controls on all 22 chemicals included in
the Convention's Annex. There are strict controls on the heroin-essential chemical acetic anhydride and
the Government of Turkey actively seeks the cooperation of acetic anhydride source countries to control
trade in the chemical in order to prevent its diversion from imports. More than 68 metric tons of illegal
acetic anhydride were seized from January through November 1997.
[end of document]
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The State Department web site below is a permanent electro
information released prior to January 20, 2001. Please see w
material released since President George W. Bush took offic
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NOTE: External links to other Internet sites should not be co
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International Narcotics Control Strategy Report, 1997
Released by the Bureau for International Narcotics and Law
Enforcement Affairs, U.S. Department of State
Washington, DC, March 1998
MONEY LAUNDERING AND FINANCIAL CRIMES
What Is Money Laundering?
People who commit crimes need to disguise their money so that they can then use it. This truism is the
basis for all money laundering and tax fraud, whether that of the drug trafficker, organized criminal,
terrorist, arms trafficker, blackmailer, or credit card swindler. Money laundering generally involves a
series of multiple transactions used to disguise the source of financial assets so that those assets may be
used without compromising the criminals who are seeking to use the funds. Through money laundering,
the criminal tries to transform the monetary proceeds derived from illicit activities into funds with an
apparently legal source.
Due to the clandestine nature of money laundering, it is difficult to estimate the total volume of
laundered funds circulating internationally. Analytic techniques are highly imprecise, involving such
measures as multiplying the volume of trade in an illicit activity-such as drug trafficking, arms
trafficking, or fraud-by the value of that trade. Such rough estimates place the annual, worldwide value
of laundered funds in the range of $300-500 billion.
Weak financial regulatory systems, lax enforcement, and corruption are key factors that make certain
jurisdictions particularly attractive for laundering illicit proceeds by international drug trafficking and
other criminal organizations, by terrorist groups financing their activities, and by pariah states
undertaking financial transactions to evade international sanctions and to acquire technologies and
components for weapons of mass destruction.
As the United States assesses a jurisdiction's vulnerability to money laundering, it evaluates the role of
the jurisdiction's financial services sector in facilitating illicit financial transactions, including: the
laundering or otherwise improper transfer or distribution of funds or maintenance of accounts; the nature
and extent of legislation and regulations to prevent illicit transactions; the capabilities and willingness of
the government to enforce existing legislation and regulations and the results of the government's
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actions to enforce those laws; and, the volume of illicit transactions detected by US law enforcement
agencies in the financial services sector of that jurisdiction.
There are three elements to the complete laundering of funds, beginning with the placement of currency
into a financial services institution ("placement"), continuing with the movement of funds from
institution to institution to hide the source and ownership of the funds ("layering"), and concluding with
the reinvestment of those funds in an ostensibly legitimate business ("integration").
While countermeasures to all three components of money laundering are important, laundered money is
most vulnerable to detection at the placement stage. As a consequence, international regulatory and law
enforcement efforts have concentrated especially on developing methods to make it difficult to place
illicit funds without detection by developing measures such as suspicious transaction reporting
requirements, cross-border monetary declaration requirements, and "know your customer" rules for
those accepting cash deposits.
International standards to discourage layering have also begun to develop, through a focus on
transparency and through pressure to eliminate techniques such as the use of nominees and numbered
accounts to disguise the actual ownership of assets. Of additional importance has been the growing
international recognition that bank secrecy rules must give way to permit law enforcement agencies to
review financial records in cases where there is an active criminal investigation pertaining to the source
of the funds.
Finally, integration of illicit proceeds can be fought through the strengthening of asset forfeiture laws,
by which governments can seize the proceeds of criminal activity even when those proceeds have been
reinvested in ostensibly legitimate enterprises. Currently, the United States and its international partners
are examining methods by which asset forfeiture regimes, and asset sharing among law enforcement
agencies of different countries, can be strengthened to place more pressure on money launderers and to
make it more difficult for them to assume that after "integration" they have successfully protected their
money from the law.
Why Is It Important To Fight Money Laundering?
Money laundering has devastating social consequences and is a threat to national security because
money laundering provides the fuel for drug dealers, terrorists, arms dealers, and other criminals to
operate and expand their criminal enterprises. In doing so, criminals manipulate financial systems in the
United States and abroad. Unchecked, money laundering can erode the integrity of a nation's financial
institutions. Due to the high integration of capital markets, money laundering can also negatively affect
national and global interest rates as launderers reinvest funds where their schemes are less likely to be
detected rather than where rates of return are higher because of sound economic principles. Organized
financial crime is assuming an increasingly significant role that threatens the safety and security of
peoples, states and democratic institutions. Moreover, our ability to conduct foreign policy and to
promote our economic security and prosperity is hindered by these threats to our democratic and freemarket partners.
In recent years, crime has become increasingly international in scope and the financial aspects of crime
have become more complex due to the rapid advances in technology and globalization of the financial
services industry. Money laundering can have devastating effects on financial institutions and
undermine the stability of democratic nations. Modern financial systems permit criminals to transfer
instantly millions of dollars though personal computers and satellite dishes. Money has been laundered
through currency exchange houses, stock brokerage houses, casinos, automobile dealerships, insurance
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companies, and trading companies. The use of private banking facilities, offshore banking, wire systems,
shell corporations, and trade financing all have the ability to mask illegal activities. The criminal's
choice of money laundering vehicles is only limited by his or her creativity. Ultimately, this laundered
money flows into global financial systems where it can undermine national economies and currencies.
Money laundering is not only a law enforcement problem but a serious national and international
security threat as well.
There is now worldwide recognition that we must deal firmly and effectively with increasingly elusive,
well financed, and technologically adept criminals who are determined to use every means available to
subvert the financial systems that are the cornerstone of legitimate international commerce. Money
launderers can impact countries by reducing tax revenues through underground economies, competing
unfairly with legitimate businesses, damaging financial systems, and disrupting economic development.
Money laundering is now being viewed as a central dilemma in dealing with all forms of international
organized crime because financial gain means power. Fighting money launderers not only reduces
financial crime, but it also deprives criminals of the means to commit other serious crimes.
Many countries around the world already engage in a concerted effort to combat money laundering and
other financial crimes. Through the enactment of counter-money laundering laws, bilateral and
multilateral agreements, and other cooperative efforts, nations have joined together to foster an
international awareness of the seriousness and threat of this criminal activity.
With a complex and sophisticated financial system that is often a target for money laundering, the
United States is working hard both at home and abroad to fight this crime. An increasing number of
countries have also moved to deny criminals unfettered access to their financial systems. While much
progress has been made, there are still nations that are not yet adequately addressing this problem. And
the international criminal is taking full advantage, moving vast sums of illicit money through the world's
financial systems. International criminals know no geographic boundaries and still operate in "safe
haven" jurisdictions that permit, or even encourage, this criminal activity.
If the United States, along with its international partners and allies, is ultimately going to be successful
in this fight, then we must make it even more difficult for criminals. Efforts must focus on both those
areas where criminals are now operating and where they will try to infiltrate in the future, and we must
foster cooperation with those nations that, heretofore, have allowed criminal enterprises to flourish
unchecked.
Money Laundering Trends and Typologies
Current Global Trends in Money Laundering
Several general observations can be made regarding the current characteristics of money laundering.
One, drawn from the two most recent Financial Action Task Force (FATF) typologies exercises, is that
the global nature of the money laundering phenomenon has rendered geographic borders increasingly
irrelevant. Launderers tend to move their activity to jurisdictions where there are few or weak money
laundering countermeasures. Two, no significant new methods of money laundering have been
identified during the past year, and a number of traditional money laundering techniques, such as
smurfing and the use of offshore businesses, continue to be prominent methods for hiding the proceeds
of crime. Three, while changes continue to be observed in usage of various traditional money laundering
methods, there is a growing trend of money launderers moving away from the banking sector to the nonbank financial institution sector. In the non-bank financial sector, the use of bureaux de change
(currency exchange houses) and money remittance businesses (such as wire transfer companies) to
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dispose of criminal proceeds remain among the most often cited threats.
Four, there is also a continuing increase in the amount of criminal cash being smuggled out of countries
for placement into financial systems abroad. In many European and other countries there are no crossborder controls on the movement of cash, and it is relatively simple for launderers to take large sums of
cash by road to neighboring countries. As with drugs, law enforcement officials believe that while
passengers are carrying large amounts of cash on their persons, an even greater amount of cash is
probably being hidden in cargo shipments. This trend of cash smuggling appears to be mostly
attributable to the success of anti-money laundering measures in banks and other financial institutions.
Finally, the most noticeable trend is the increase in the use by money launderers of non-financial
businesses or professions related to banking institutions. Money launderers are increasingly receiving
the assistance of professional facilitators such as accountants, notaries, lawyers, real estate agents, and
agents for the purchase and sale of luxury items, precious metals and even consumer durables, textiles
and other products involved in the import-export trade-who utilize a variety of vehicles to mask the
origin and ownership of tainted funds. The use of shell companies, usually incorporated in offshore
jurisdictions, is a common technique. Laundering of accounts held by relatives or friends is also popular.
International Gold Trade
The international gold trade is being used to launder significant amounts of criminally derived funds.
There are many reasons for gold's popularity with money launderers. It is a readily acceptable medium
of exchange, it offers easy anonymity, and the trade is readily manipulated. Gold is one of the only
commodities that acts very much like currency.
There are many different scenarios for the laundering of funds via the purchase of gold. For example, in
the US, illicit cash from street drug sales can be accumulated and then laundered by purchasing gold. A
drug trafficker in the US could manipulate import records to launder illicit funds by: (1) importing gold
at higher than market price; (2) importing gold at the market rate, but substituting it with a lower priced
metal (for example, with gold-plated lead bars); (3) overstating the quantity of the gold imported; or (4)
importing and paying for merchandise legitimately, but "selling" or giving back the merchandise to the
exporter. These schemes allow criminals to move large sums of money out of the US as payments to a
foreign "supplier."
The next step in the laundering cycle is to consolidate the gold purchases. One of the unique
characteristics of gold is that it can be easily converted into its various forms such as bars, jewelry, and
scrap. United States law enforcement sources indicate that most major gold dealers/brokers have several
bookkeeping accounts-gold accounts, silver accounts, dollar accounts, and local currency accounts. An
easy method to layer illegal funds is simply to transfer the gold on a gold broker's books to these other
accounts. This method makes it extremely difficult for criminal investigators to trace the trail of illicit
funds. There is an obvious need for countries to have better tools to combat this problem and to monitor
the international movement of gold.
Black Market Peso Exchange
A primary money laundering scheme used by Colombian drug cartels involves use of the Colombian
black market peso exchange. The brokers who operate the black market peso exchange are international
financiers who are capable of facilitating multi-million dollar transactions outside Colombia's legitimate
financial system. In this money laundering scheme, the Colombian cartels sell drug-related, US currency
to black market peso brokers in Colombia who, with their US-based agents, place the US currency into
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US bank accounts while trying to circumvent the US Bank Secrecy Act (BSA) reporting requirements.
The exchangers then sell monetary instruments drawn on their bank accounts in the US to Colombian
importers who use these instruments to purchase foreign goods. This method is the single most efficient
and extensive money laundering scheme in the Western Hemisphere and works as follows:
1) A Colombian drug cartel arranges the shipment of drugs to the United States;
2) The drugs are sold in the US in exchange for US currency;
3) The cartel sells its US currency to the Colombian black market peso broker's agent in the United
States. The US currency is sold at a discount because the broker and his agent must assume the risk of
evading the BSA reporting requirements when later placing the US dollars into the US financial system;
4) Once the dollars are delivered to the US-based agent of the peso broker, the peso broker in Colombia
deposits the agreed upon equivalent in Colombian pesos into the cartel's account in Colombia. At this
point, the cartel has laundered its money because it has successfully converted its drug dollars into
pesos;
5) The Colombian broker and his agent now assume the risk for introducing the laundered drug dollars
into the US banking system, usually through a variety of surreptitious transactions;
6) The Colombian black market peso broker now has a pool of laundered funds in US dollars to sell to
Colombian importers who use the dollars to purchase goods, either from the US or from other markets;
and
7) Finally, those goods are transported to Colombia, often via smuggling in order to avoid applicable
Colombian law.
Money Laundering Activity in the US
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The United States continues to have a serious money laundering problem because of the complexity,
strength, and stability of our economy and financial system. Examples of money laundering techniques
identified by US law enforcement during the past year appear to indicate that the same techniquesstructuring, smuggling, and currency exchange-continue to be among the most utilized within the United
States. Structuring involves the deliberate division of large amounts of cash into transactions amounting
to less than the $10,000 currency reporting threshold in order to evade the BSA reporting requirement,
and it still plays a major part in many large scale US money laundering schemes. Increased scrutiny by
US banks has caused the actual structuring level to be reduced to less than $3,000 in most cases.
Asset or Monetary Instrument Purchases with Cash Proceeds
One important money laundering technique identified in the US is the conversion of consumer products
purchased with dirty currency which are then exported to Colombia, for example, where they are sold
for pesos. Consumer electronics, especially computers, are popular products purchased for export. Other
durable goods, such as telephones and jewelry, are also exported. Law enforcement information clearly
indicates that some major retailers (including warehouse clubs and home improvement chain stores) in
the Miami area and in other major US cities make large (over $10,000) cash sales to individuals, who
then forward the merchandise, usually through a shipping broker, to Colombia. Area distributors in these
cities have told investigators that there is a very high demand for unreported cash sales.
Private Bankers
Some US law enforcement agencies believe that private or personal banking service representatives, i.e.,
bank employees who provide special services to high-value customers, may be vulnerable to money
laundering. Several examples have included instances of private banking representatives establishing
bank accounts for foreign nationals without requesting adequate customer identification, and one private
banking officer reportedly has assisted "smurfs" (persons who structure cash deposits) by warning them
of upcoming audits in order to avoid detection by bank auditors.
Non-Bank Financial Institutions
Non-bank financial institutions (NBFIs) continue to be used as sites for money laundering in the US
despite a number of efforts at both federal and state levels. NBFIs subject to the BSA include brokers
and dealers of securities, the US Postal Service, money order vendors, casinos, money transmitters,
check cashiers, and bureaux de change. With over 200,000 NBFIs in the United States, monitoring of
these businesses for money laundering is a complicated matter. Moreover, the role of these institutions
in money laundering operations varies. Some, such as the US Postal Service or certain casinos, may be
used by others as unwitting facilitators in the process; while others, such as certain bureaux de change or
money transmitters, may be knowingly involved in laundering illegal proceeds. Among NBFIs, US law
enforcement continues to cite bureaux de change and money transmitters as most heavily involved in
laundering operations.
Non-Financial Businesses and Professions
The United States has increasingly seen the use of non-financial businesses or professions as
mechanisms of money laundering, such as the international gold market and the black market peso
exchange system.
One US case involved a prominent attorney in a large US city whose practice centered on operating a
money laundering network which used domestic and international financial institutions, especially in
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offshore jurisdictions. The offshore institutions were located in Bermuda, the British Virgin Islands, the
Cayman Islands, Isle of Man, and Jersey. The attorney had clientele ranging from drug dealers to tax
evaders. One client was responsible for an $80 million dollar insurance fraud in which the attorney
assisted him by transferring the money into financial institutions in countries with little or no anti-money
laundering provisions. The attorney would establish accounts in these various offshore banks under false
corporate and individual names. The illicit funds would be deposited in the form of cash and various
types of checks. This money was then commingled by use of wire transfers throughout various other
accounts which the attorney controlled. It is perhaps significant that because of the lawyer's status as a
prominent attorney, domestic banks did not question the nature of the transactions being conducted.
In another US case, the sole owner of a now defunct insurance company, which had become the leading
insurer of student accident and school association liability coverage in the United States, was convicted
by a federal jury on money laundering and related charges in a scheme defrauding clients of over $1.6
million in trust fund monies that he had misappropriated from state school activities associations. This
amount represented money paid by the various state school associations into a single common pool of
trust funds that the defendant contracted to maintain for the associations' exclusive use as a self-risk
retention liability program. It was established during trial that the defendant was effectively operating a
Ponzi scheme and was not properly funding the trust fund pool. A "Ponzi scheme" is defined as an
investment swindle in which some early investors are paid off with money put up by subsequent
investors in order to encourage additional and larger risks. The defendant laundered the monies by
commingling and integrating the fraudulently obtained insurance premiums into his own accounts and
using the monies to pay his business and personal expenses instead of adequately funding the trust fund,
and he disguised the laundering by creating false financial statements.
New Payment Technologies
Electronic money (e-money) has the potential to make it easier for criminals to hide the source of their
proceeds and move those proceeds without detection. While the application of new technologies to
electronic or cyber-payments systems is still in its infancy, it is prudent to recognize their potentially
broader impact. The technology exists which could permit these systems to combine the speed of the
present bank-based wire transfer systems with the anonymity of currency. E-money transactions could
also be effected in multiple currencies without limits and conducted entirely without intermediaries.
Although no money laundering prosecutions have yet been undertaken to combat abuse of new payment
technologies, many countries have reported the increased use of Internet banking and gambling via the
Internet. United States law enforcement authorities have several cases under active investigation
involving criminals who have made use of these technologies to solicit clients or to move funds.
Countries should pay close attention to the emerging threats made possible by these and other new
payment technologies being used in money laundering schemes, and they should consider developing of
preventative countermeasures. Moreover, even legitimate banking and gambling through the Internet
raises many legal and practical issues for law enforcement. These include questions of jurisdiction,
customer identification and broken audit trails.
What We Need To Do
In an electronic world in which the banking system operates through linked computers 24 hours a day,
there must be increased global emphasis upon thorough vetting of personal, company and financial
institution accounts at the bank of origin. There is no substitute for a thoroughly applied know-yourcustomer policy, especially as applied to those placing currency into the system and converting it to an
account susceptible to immediate transfer outside the jurisdiction.
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Considerable attention also must be focused by anti-money laundering authorities on establishing
international standards, obtaining agreements to exchange information, establishing linkages for
cooperative investigations, and overcoming political resistance in various key countries to ensure such
cooperation.
Governments need laws and regulations that: establish corporate criminal liability for bank and nonbank financial institutions for money laundering violations; apply to all financial transactions, not just to
cash transactions at the teller's window; apply reporting and anti-money laundering measures to serious
crimes, not just drug trafficking; criminalize investments in legitimate industry if the investment
proceeds were derived from illegal acts; and enable the sharing of financial and corporate ownership
information with law enforcement agencies and judicial authorities.
Governments also need strategies that focus on changes in both the operations of financial systems and
the methods criminals develop to exploit them-strategies which look at specific governments and
specific financial systems.
Over time, a number of specific continuing actions are needed to keep pace with the dynamics of money
laundering in a high-tech world. Continuous action is needed on each of the following categories in
1998 and for the foreseeable future:
1. Adoption and Implementation of International Anti-Money Laundering Standards. The
development of international standards to reduce jurisdictions' vulnerability to money laundering and to
enhance financial, regulatory and law enforcement of anti-money laundering regimes has been at the
forefront of the fight against this crime. Accordingly, it is critical that these standards, which continue to
be refined and strengthened, be adopted on a global basis. Today, these standards include, among others:
the FATF 40 Recommendations, the Aruba 19 Recommendations (CFATF), the OAS Model
Regulations on Money Laundering, the Summit of the Americas December 1995 Buenos Aires
Communiqué Plan of Action, the European Directive on Money Laundering, and the Basle Principles.
2. Constant Monitoring of Money Laundering Patterns, Trends and Typologies. More sophisticated
techniques, involving both bank and non-bank financial institutions, in a wide array of traditional and
non-traditional financial centers, have complicated identification, tracing and investigation. Information
exchanges have been improving, but critical gaps in know-how must be closed in tandem with improved
cooperation. There is a high priority need to share data, even critical intelligence. The pervasive
corruption in some systems remains a barrier to information sharing.
3. Analysis of Money Management Practices. We need improved information from more countries on
what factors influence drug traffickers and their money managers to use particular systems in specific
countries, to keep reserves in cash and other monetary instruments, to invest rather than park funds.
Interviews of arrested drug money managers are producing detailed profiles of money management
schemes. The best data so far applies to the cocaine trade, but we need to develop the same level of
knowledge about heroin and marijuana syndicates.
4. Tightening Restrictions Against Non-Drug Related Money Laundering and Other Financial
Crimes. We need to identify the parallels between drug money laundering on the one hand, and nondrug related money laundering and other financial crimes on the other, and achieve an effective
international capability to investigate and prosecute all these crimes. While a number of governments
are willing to impose new restrictions on drug-related financial crimes, many hesitate to apply such
strictures to other non-drug money laundering and other forms of financial crime.
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5. Equating Economic Power with Political Clout. The increasing concentrations of wealth among
criminal groups in a number of jurisdictions is a concern, not only because of possible impacts on
investments, real estate values, legitimate commerce and government integrity, but also because these
organizations have the wealth to make large financial contributions to government officials who may
compromise decisions in order to assist the criminals. We need to assess the national security, foreign
policy, and political implications of these accumulations and transfers of wealth in all financial centers
where such wealth is being concentrated. Corrupt officials and non-transparent financial systems
represent a continuing threat to democracy and free markets in literally every region of the world.
6. Eliminating Systemic Weaknesses. Banks need to maintain similar records on their financial
institution clients as they do for other customers and to report suspicious transactions involving such
clients. Some available but underutilized tracking mechanisms include revocation of licenses, changes in
ownership and management, levying of fines, and prosecutions. Perhaps the most intrinsic weakness is
the lack of qualified personnel, not only in government regulatory agencies, but also within many
banking systems, who are trained not only in implementing and managing such oversight systems, but
also in handling today's complex monetary transactions. The enhanced training reported in recent
international meetings is encouraging, but more is necessary.
7. Assessing the Criminal as Entrepreneur. We need to explore the extent to which criminal
organizations are penetrating legitimate financial and other businesses, using their vast resources to gain
control and to influence economic, financial and business decisions. More data and systematic analysis
are needed, for example, on the role played by the trafficker and money launderer in foreign exchange
markets, including their use of and creation of gray markets. There is good reason to question the overt
as well as covert ownership of banks and financial institutions in many parts of the world.
8. Analyzing the Impact of Money Laundering on National Governments and Economies. We need
more analysis of the impact of a country's political and structural factors on its receptivity to money
laundering and more analysis of the impact of money laundering and political life and economic life of
the jurisdiction. Among the questions requiring analysis is the extent to which structural macroeconomic factors, such as commodity deflation, sustained high levels of unemployment, and recession
make a jurisdiction susceptible to becoming a money laundering haven. At the sectoral level, we need to
determine the influence of black markets on legitimate enterprises. At the institutional level, we need to
identify the major factors that may influence bankers and other financial managers in some jurisdictions
to accept money they have reason to believe is tainted. As we better identify where money laundering is
most likely to have a macro-economic or political impact, we need to evaluate the potential effectiveness
of economic countermeasures. These could include limiting or excluding access to the global financial
system of entities or states identified as major problems.
9. Regulating Exchange Houses and Remittance Systems. There is ample evidence that the various
underground "hundi", "hawala", and "chop" remittance systems, so essential to economic life in the
Middle East, South and East Asia, are being used by drug traffickers, just like the "cambios" of Latin
America, and non-bank institutions of all kinds, are being used in the western financial community.
They serve vital functions for key sectors of many economies. Systems for regulating the laundering of
the proceeds of crime are essential, but they will fail unless they take into account the very informality
that makes underground banking effective and desirable.
10. Continuing to focus attention on offshore banking. The Financial Action Task Force (FATF),
working with the Offshore Group of Banking Supervisors (OGBS) and other relevant organizations,
have been quite effective in working together, and some of offshore banking centers are either members
of FATF or the Caribbean Financial Action Task Force (CFATF) or have participated in FATF/CFATF
seminars which provided guidance on adopting and implementing FATF and UN guidance. The
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agreement in Paris in February 1997 to undertake compatible mutual evaluations of these constituencies
should be given a high priority for early implementation. More analysis is needed of the methods used to
move money through offshore banks, and OGBS should be supported in its efforts to include as many
offshore banking centers as possible within its membership and a parallel effort to evaluate progress by
its members.
11. Expanding the global use of the mutual evaluation process. The CFATF has an on-going mutual
evaluation process to assist its members' anti-money laundering regimes, and the Council of Europe is
also beginning to implement such a process for jurisdictions in the Newly Independent States of the
former Soviet Union (NIS) and in Central and Eastern Europe. These important regional initiatives
should continue apace and can serve as prime examples in spreading money laundering countermeasures
to other regions, such as Asia, Africa and the Middle East.
12. Consolidated supervision of the international banking system: The Basle Principles. The Basle
Committee on Banking Supervision released its Core Principles for Effective Banking Supervision in
September 1997. This document establishes 25 Core Principles to serve as a basis for supervision in all
countries. They are comprehensive in their coverage, addressing the preconditions for effective banking
supervision, licensing and structure, prudential regulations and requirements, methods of ongoing
banking supervision, information requirements, formal powers of supervisors and cross-border banking.
Principle 15 requires banking supervisors to determine that the banks they supervise have adequate
policies, practices and procedures in place, including strict "know your customer" rules, that promote
high ethical and professional standards in the financial sector and prevent the banks from being used,
intentionally or unintentionally, by criminal elements. Supervisory authorities throughout the world will
be encouraged to endorse the Principles by no later than October 1998. The Principles have been
designed to be verifiable by supervisors, regional supervisory groups, and the market at large. The Basle
Committee will play a role, together with other interested organizations, in monitoring progress made by
individual countries in implementing the Principles.
13. Adopting Information Standards. The adoption by governments of information standards such as
those recommended by FATF and the Society for Worldwide Interbank Financial Telecommunication
(SWIFT) network is a welcome, if not yet universal, step. Many more governments need to cooperate in
adopting regulations to help curb the misuse of electronic transfer and payment mechanisms to launder
illicit funds.
14. Detecting Counterfeit Instruments. Governments and banking systems must be more vigilant in
efforts to detect counterfeit currency and other monetary instruments. The schemes involving counterfeit
bonds and other securities, usually as collateral, suggest the need for an international clearinghouse to
assist banking and financial systems outside the major centers in determining the authenticity of
documents.
15. Identifying and Preventing Financial Crimes. Governments and banking systems must exert
greater efforts to identify and prevent a wide range of financial crimes, beyond drug and non-drug
money laundering, including financial frauds such as credit card fraud and prime bank guarantees. The
history of such frauds suggests a need for a clearinghouse which can assist the financial services
industry in identifying customers and authenticating documents.
16. Ratifying and Implementing the l988 UN Drug Convention. The United Nations Drug Control
Program (UNDCP) should intensify its efforts to ensure that all significant financial center countries are
implementing fully the anti-money laundering and asset forfeiture provisions of the 1988 UN Drug
Convention. As an immediate priority, UNDCP should focus on securing ratification or accession of the
significant financial center governments which have not yet become parties to the Convention.
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17. Pursuing A Continuously Evolving Strategy. Nearly every opportunity that global businesses and
finance companies have to offer legitimate commerce is today used by money launderers and financial
fraudsters. Financial regulation, supervision and enforcement needs to expand to cover transactions that
transcend national boundaries and to cover the widening array of financial service businesses. Similarly,
there is a growing need to reduce the increasing use of non-financial service providers in the
commission of these crimes.
US Money Laundering Countermeasures
In the United States, nearly 5,000 personnel-from at least 75 agencies-are directly involved at the federal
and state levels in the prevention and detection of money laundering and the enforcement of anti-money
laundering laws. United States anti-money laundering policy is based on the belief that it is more
effective when agencies that are engaged in money laundering countermeasures work together than
when each works alone. This means that in the anti-money laundering area, the US relies heavily on
joint investigations or task force operations to bring together what might otherwise be a diffused effort
of individual agencies. It also means that the US effort depends heavily on developing cooperative
relationships among law enforcement, financial regulators, and the financial private sector to ensure that
as many vulnerabilities to the financial system as possible are reduced.
Partnership with Financial Institutions
The United States continues to look for creative ways to facilitate a productive dialogue among law
enforcement, regulators, and banking officials. Most recently, US agencies have turned their attention to
examining Suspicious Activity Reports (SARs), which since April 1996 have been required to be
submitted by depository institutions, including banks, thrifts and credit unions. These reports are entered
into a database and made available to federal and state financial regulators and to federal and state law
enforcement agencies.
Analyses of SARs-especially in the context of interagency investigator and prosecutor review teamshelp identify broadly the types of suspicious activities which may be money laundering schemes
reported by banks and permit proactive, rather than reactive, targeting. A comparison of SARs against
issues of concern in specific investigations should facilitate communications among law enforcement,
bank regulators and the banking community about how best to focus suspicious activity reporting
efforts. The objectives are for the government to provide guidance to the financial community on
suspect activity identified by law enforcement and to seek insight from the financial community on how
both the public and private sector can work together to prevent and detect abuses of the financial system.
Geographic Targeting Orders
Money transmitters, sometimes referred to as money remitters, are businesses which receive moneyusually cash-from customers and arrange for payment to designated recipients in exchange for a
commission of up to 10 percent of the value of the transfer. They provide a valuable, legitimate financial
service and traditionally serve the "unbanked" segment of the population, typically new immigrants, or
other persons who do not maintain bank accounts.
However, in the United States, Colombian drug cartels have been suspected of using certain money
transmitters in the New York City metropolitan area to launder their drug profits. Evidence gathered by
law enforcement authorities initially indicated that 12 state-licensed money transmitter companies in the
New York metropolitan area and their agents were particularly vulnerable to abuse by cartel money
launderers. Under the Bank Secrecy Act, a Geographic Targeting Order (GTO) was issued on August 7,
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1996 against these 12 money transmitters and their 1,600 agents.
A GTO is a 60-day tool used to impose stricter reporting and record keeping requirements for a limited
time period by specified financial service providers in a certain geographical area. The Colombia GTO
required the transmitters in question to report all cash remittances to Colombia of $750 or more. The
reporting amount was set at $750 so as to not interfere with the average legitimate international
remittance of $200 to $500. The original GTO-expanded to include a total of 23 licensed transmitters
and approximately 3,500 agents-was extended six times, finally expiring in October 1997. The GTO was
expanded to include a total of 23 licensed transmitters and approximately 3,500 agents.
The Colombia GTO caused an immediate and dramatic reduction in the flow of narcotics proceeds to
Colombia through New York City money transmitters. The targeted money transmitters' business
volume to Colombia dropped approximately 30 per cent. Transmitter business to Colombia declined
even from money transmitters not subject to the GTO, suggesting that much of the money remitted to
Colombia was controlled centrally by high-level cartel money brokers.
Also during the first six months of the GTO, US law enforcement agencies observed a marked increase
in interdiction and seizure activity of cash at east coast US borders-over $50 million in the six-month
period, approximately four times more than in prior years.
This GTO also had a significant impact on money laundering activity among the targeted transmitters.
Several stopped sending funds to Colombia or went out of business altogether. Approximately 900
agents of these money transmitters, often storefront businesses, closed their doors or moved without
leaving a forwarding address. Several money transmitter agents have pled guilty to structuring
transactions to avoid the reporting requirements, and law enforcement authorities made numerous
additional arrests.
On August 22, 1997, the Department of the Treasury issued two new GTOs (the Dominican Republic
GTOs) targeting cash-purchased money remittances of $750 or more to the Dominican Republic. The
Dominican Republic GTOs apply to 21 money remitters and their agents in Puerto Rico and the New
York City metropolitan area who in recent years have been remitting annually hundreds of millions of
dollars to the Dominican Republic. The terms of these GTOs parallel those of the one focused on
remittances to Colombia. The Dominican Republic GTOs were made effective on September 2, 1997 for
an initial 60-day term; they have been renewed twice, so they are scheduled to expire on February 28,
1998. Issuance and renewal of the Dominican Republic GTOs represent the first time that a GTO has
been used in Puerto Rico. Initial reports indicate that the Dominican Republic GTOs have dramatically
reduced the volume of cash remittances from Puerto Rico to the Dominican Republic.
Development of Anti-Money Laundering Accounting Standards
The United States has followed with interest the development in foreign jurisdictions of accounting
standards specifically designed to counter money laundering within financial institutions. As a result, the
United States has embarked on the development of appropriate accounting standards to counter money
laundering within financial institutions, and has created a sub-group of the Bank Secrecy Act Advisory
Group to focus efforts and attention on this process. Members of the sub-group include the primary US
regulator of the accounting industry, the Securities and Exchange Commission, the Controller General
of the United States, the US Department of the Treasury, large accounting firms, and foreign experts in
this area.
Targeting Cash Proceeds Money Laundering
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In 1997, the Departments of Justice and the Treasury co-sponsored for the first time two major antimoney laundering conferences. The objectives of these joint conferences, held in Washington, D.C.,
were to acquaint the participants with new anti-money laundering developments both at home and
abroad and to seek input for attacking, through a coordinated financial sector targeting approach, the
laundering of billions of dollars of drug proceeds in, through and out of the United States. The first
conference, held in May 1997, was attended by approximately 160 representatives from the US
Attorneys' Offices and federal and state law enforcement agencies from 14 core money laundering
districts, as well as representatives from the financial regulatory authorities.
The conference presentations reviewed recent anti-money laundering developments including: the use of
the New York City/New Jersey GTO; the use of FinCEN advisory notices to alert banks and other
financial institutions to suspicious financial activities such as the use of foreign bank drafts; suspicious
activity reporting by banks and nonbank financial institutions; wire transfer record keeping requirements
for banks and other financial institutions; the proposed FinCEN regulations with respect to money
service businesses; US Postal Inspection Service, US Customs Service (USCS) and the federal
regulators' recent anti-drug proceeds money laundering initiatives.
A follow-up conference was held in December 1997 and was attended by more than 200 Assistant US
Attorneys and federal and local law enforcement agents from 20 districts. Immediately preceding the
second conference, interagency working groups convened to examine and discuss two specific money
laundering methods: the use of money orders to launder drug cash proceeds and the shipping of bulk
cash into and out of the United States. Representatives from these working groups reported their
findings to the conference and made recommendations to enhance enforcement in these areas. The
money order working group was led by a representative of the US Postal Inspection Service. The bulk
cash working group was led by representatives of the USCS.
Like the first conference, the second conference provided an opportunity for money laundering
prosecutors, agents and forfeiture attorneys from around the country to examine the money laundering
issue on a national level and to coordinate their efforts to maximize the results from their investigations
and prosecutions. By spending a significant amount of time discussing the Black Market Peso Exchange
scheme, law enforcement actions on a local level take on more significance as they become part of a
larger picture. Similarly, by increasing awareness of law enforcement and regulatory tools, as well as
legal developments in foreign countries, the participants were able to begin to prepare a coordinated plan
of attack against money laundering both domestically and internationally.
In October and November 1997, the Attorney General issued three memoranda to the 94 US Attorneys,
the Director of the FBI, and the Administrator of the DEA, stating:
Laundering the billions of illicit dollars produced on the streets of our cities requires a highly
sophisticated and tightly controlled financial structure for use by the cartels producing, transporting and
selling their illicit products. At the same time, where organized criminal activity generates its profits in
the form of cash, the sheer volume of this illicit cash and the need of the enterprise to enter it into the
legitimate financial system are vulnerabilities for that criminal enterprise, and could provide law
enforcement with perhaps its best opportunity to target those illicit proceeds.
Accordingly, she directed these Department of Justice components to give their immediate attention as
follows:
Where cash proceeds money laundering is a significant problem in your district, allocate the personnel,
time and effort necessary to develop interagency expertise to identify, target, and take a comprehensive
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approach to dismantling the drug money launderers' use of financial sectors, or their methods of moving
the cash physically in bulk.
Enforcement Cases
Mexican Drug Conspiracy
The United States Customs Service completed a civil investigation that resulted in the seizure and
forfeiture of $9,041,599 in narcotics proceeds from the former Mexican Deputy Attorney General Mario
Ruiz Massieu. From December 1994 to March 1995, Inspector General Jorge Stergios of the Mexican
Attorney General's Office of Mexico transported more than $9,000,000 in cash from Mexico into the
Houston Intercontinental Airport in Texas. Stergios transported this cash in suitcases and cardboard
boxes during more than twenty trips into Houston. Stergios completed the required Currency and
Monetary Instruments Report on each trip. The cash was subsequently deposited into an account held by
Ruiz Massieu at the Texas Commerce Bank (TCB). The TCB completed the required Currency
Transaction Report on each transaction.
In March 1997, a federal district judge ruled that there was probable cause to believe that Ruiz Massieu
and Stergios were involved in a drug conspiracy with Mexican drug traffickers and other Mexican law
enforcement officers. A federal jury then determined that almost $7.9 million of the monies deposited in
TCB had come to Ruiz Massieu as a result of bribes paid by the drug traffickers and, as such, should be
forfeited to the United States.
Illegal Importation of Controlled Refrigerant Gas
Refrigeration USA, a Miami and Hallandale, Florida based corporation, and its president, along with a
bookkeeper and an import/export clerk, all pled guilty-only six days into a projected six week jury trialto conspiring with others to import the controlled refrigerant gas, CFC-12, without holding consumption
allowances required by the Federal Clean Air Act. They orchestrated an involved scheme featuring
bogus bills of lading filed with the USCS, the Environmental Protection Agency, and the IRS. The
defendants purchased CFC-12 from a variety of sources in Europe and caused payment for the gas to be
made from accounts opened under fictitious names in Switzerland and the Channel Islands. The
president of the corporation falsely claimed to hold a virtually exclusive license to import the gas into
Florida, thus accounting for the inordinate amounts of money flowing through the accounts.
The defendants also employed nominee corporations in the Turks and Caicos islands to conceal their
activities from US authorities and to further their efforts to impede the IRS in collection of excise taxes
due to domestic sale of the gas. During the presentation of evidence in the criminal trial, the government
employed bank records to illustrate the illegal transactions. The documents were provided through the
cooperation of the Turks and Caicos pursuant to a MLAT between the United States and the United
Kingdom on behalf of Turks and Caicos.
The plea agreement by the president of the corporation required the immediate surrender to the United
States of over $4,470,000 in cash held in offshore accounts, the forfeiture of real property in Miami and
London, England, valued at over $3,400,000, the forfeiture of stock in a domestic bank, and the
surrender of 11,200 thirty-pound cylinders of gas seized by the USCS in December 1994, which had a
market value of $6,700,000. The United States District Court levied a fine of $37 million and ordered
payment of $30 million in delinquent taxes.
The importation of CFC-12 is subject to strict regulation by the US Environmental Protection Agency.
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The United States has international treaty obligations under the Montreal Protocol on Substances that
Deplete the Ozone Layer to reduce and/or phase out the production and consumption of ozone depleting
substances, including CFC-12. In order to protect the environment from depletion of the ozone layer,
Congress imposed significant excise taxes on the sale or use of such chemicals. In 1993, the earliest year
of the activity identified in the indictment, the excise tax was $3.35 per pound. Thereafter, the excise tax
increased each year by an additional dollar to $5.35 per pound in 1995. The US Attorney in Miami,
Florida noted that this is one of the largest forfeitures of assets achieved in an environmental crimes
case.
Queens Money Remitter
On July 22, 1997, one of Queens, New York's largest money remitters was indicted for allegedly
sending hundreds of millions of dollars, most of which were laundered drug profits, to Colombian
cartels through branch offices in Queens. The company and its former chief executive officer were
indicted for laundering narcotics proceeds and for structuring financial transactions, and the government
seeks the forfeiture of at least $10 million, representing the proceeds of the money laundering and
structuring activities. The CEO eventually pled guilty to conspiracy to launder money.
The case was investigated jointly by the USCS and the New York Police Department (NYPD) under the
auspices of the El Dorado Task Force. The investigation arose from allegations of money laundering and
structuring cash deposits in amounts less than $10,000 so as to avoid the Bank Secrecy Act (BSA) filing
requirements. The government alleges that the defendants remitted in excess of $775 million to
Colombia, the bulk of which consisted of narcotics proceeds. As the investigation progressed toward the
indictment of the company and its CEO, approximately twenty-five persons were convicted on money
laundering charges over a three-year period. Collectively, these agents accounted for more than $195
million of the funds remitted to Colombia.
Nigerian Fee Scam
Three Nigerian nationals were indicted on charges that they conspired with others to defraud several
German nationals out of more than $800,000. This Nigerian scheme involved the promise to release
$22.3 million on deposit with the Central Bank of Nigeria once certain fees had been paid.
Approximately $500,000 in fees were initially paid in three installments by the Germans directly to an
account in London, England. The defendants then made an additional demand for a 1.5 per cent "cable
and communication charge" totaling $330,000. On May 13, 1994, $330,095 was wire transferred from a
Luxembourg bank, an account belonging to the victims, to one of the defendant's personal accounts at
Boatmen's First National Bank of Oklahoma, Oklahoma City, Oklahoma. After the money was credited
to the account, the defendant was directed by the other co-defendants to conduct numerous transactions
to dissipate the funds. This included the purchase of several luxury cars, a night club, and several large
wire transfers to the People's Republic of China, England, and Washington D.C. The German victims
never received the $22.3 million.
American Express Bank International
In June 1994, Antonio Gerald and Lourdes Reategui, officials with American Express Bank
International (AEBI), were convicted on money laundering conspiracy and other charges for laundering
the drug trafficking proceeds of the notorious Mexican drug trafficker Juan Garcia Abrego. The Giraldi
investigation resulted in leads that Giraldi and Reategui were also laundering drug trafficking proceeds
for a Texas man later indicated on drug trafficking, money laundering and related charges.
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In February 1989, the Texas defendant had become a client of Giraldi and Reategui at Bankers Trust,
(New York) and later at AEBI. Giraldi and Reategui created a series of offshore holding companies for
the defendant and opened bank accounts in the names of the various offshore companies, into which the
defendant secreted his drug trafficking proceeds via electronic wire transfers. From February 1989
through 1993, the defendant wire transferred approximately $17 million into these accounts. All of the
$17 million was traced to Mexican banks or to accounts held by Mexican banks in US banks in El Paso,
Texas. During 1993, the defendant liquidated the funds held by his offshore companies through wire
transfers to Mexican bank branches and to another offshore investment company. The US government
utilized Mutual Legal Assistance Treaty (MLAT) requests to Mexico, Switzerland, and the Cayman
Islands during the investigation to gather information and documentary evidence for prosecution, as well
as to attempt to identify the disposition of the funds after the defendant liquidated his accounts in l993.
An investigation of the Texas defendant had been initiated by the USCS Financial Crimes Task Force
(Operation Costa Rica) comprised of the USCS, IRS-CID, DEA, and the Pharr, Texas, Police
Department. The investigation revealed that from at least 1986 to 1996, the defendant was involved in
the transportation of large quantities of cocaine from Mexico into the United States. The defendant's
drug trafficking activities ranged in area from South Texas throughout the southwest border region to
Los Angeles, California, and included the transportation of 21 tons of cocaine, seized at Sylmar,
California, in September 1989.
On August 13, 1996, a federal grand jury in Brownsville, Texas returned a five-count indictment
charging the Texan defendant with conspiracy to launder money, money laundering, narcotics and
criminal forfeiture charges. On March 27, 1997, he pled guilty to money laundering and drug trafficking
conspiracy charges. On June 30, 1997, he was sentenced to life in prison.
Presidential Decision Directive (PDD) - 42
In his statement before the 52nd session of the UN General Assembly on September 22, 1997, President
Clinton remarked that: "In the 21st century, our security will be challenged increasingly by
interconnected groups that traffic in terror, organized crime and drug smuggling. Already these
international crime and drug syndicates drain up to $750 billion a year from legitimate economies. That
sum exceeds the combined GNP of more than half the nations in this room." In the two years since
October 1995 when the President declared international crime to be a threat to the national security
interest of the United States in Presidential Decision Directive (PDD) 42, the United States has made
international cooperation and collaboration in confronting new security threats that defy borders and
unilateral solutions a key priority of United States domestic and foreign policy.
In particular, in his October 1995 address to the UN General Assembly, the President called for
international cooperation to address the threats posed by money laundering, narcotics trafficking and
terrorism, noting that the forces of international crime "jeopardize the global trend toward peace and
freedom, undermine fragile democracies, sap the strength from developing countries, [and] threaten our
efforts to build a safer, more prosperous world." Immediately, the President signed PDD-42, ordering
the Departments of Justice, State and Treasury, the Coast Guard, National Security Council, intelligence
community, and other federal agencies to increase and integrate their efforts against international crime
syndicates and money laundering. Specifically, the President noted the corrosive effect on markets and
governments of the laundering of massive illicit profits and ordered US government agencies to increase
efforts in going after those criminal proceeds. The United States strategy has been to integrate domestic
and international efforts and to expand cooperation and consultation among its agencies to reduce
international crime.
A key component of PDD-42 has been the imposition of sanctions under the International Emergency
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Economic Powers Act (IEEPA), attacking the finances, companies and individuals owned or controlled
by the Cali cartel as well as other Colombian drug cartels, freezing their assets in the United States,
identifying their front companies and barring Americans from doing business with them. On January 15,
1997, the Treasury Department identified an additional 21 businesses and 57 individuals determined to
be directly involved with illegal traffickers and their so-called legitimate business fronts. Over the past
two years, a total of 426 individuals and businesses have been subjected to these IEEPA sanctions. As
part of the PDD-42 process, an interagency group reviews whether measures can be taken against other
international criminals. Also under PDD-42, agencies work together to deny visas to a broad range of
organized and other international criminals and their families to prevent them from entering the United
States.
United States agencies continued to identify money laundering centers that have important implications
for US national security and where expanded cooperation would significantly strengthen global antimoney laundering efforts. Several of these centers have been approached by the United States in an
effort to increase cooperation bilaterally as well as multilaterally and to reduce the threat posed by
money laundering.
Combating the rise of international crime requires far-reaching cooperation among US agencies as well
as with other nations. Under PDD-42, US agencies have worked together to collaborate with foreign law
enforcement and other government authorities to support US law enforcement abroad, seize accounts,
and prosecute, convict, and imprison criminals. United States agencies have increased, and more
effectively targeted, assistance and training and have sought better ways of collecting, analyzing and
sharing intelligence globally regarding money laundering and other financial crimes. Bilateral and
multilateral initiatives to stop criminals from moving funds throughout the international financial system
have been launched in tandem with other nations.
Bilateral Activities
Training and Technical Assistance
During 1997, a number of US law enforcement and regulatory agencies provided training on money
laundering countermeasures and financial investigations to their law enforcement, financial regulators,
and prosecutorial counterparts around the globe. These courses have been designed to give financial
investigators, bank regulators, and prosecutors the necessary tools to recognize, to investigate, and to
prosecute money laundering, financial crimes, and related criminal activity. Courses have been provided
at US locations as well as within the countries to which the programs were targeted.
Department of State
The Department of State's Bureau of International Narcotics and Law Enforcement Affairs (INL) has
developed a fiscal year 1997 $36.2 million dollar program for providing law enforcement, rule of law,
and central bank training and assistance to emerging democracies. A prime focus of the training program
is a multi-agency approach to addressing international financial crimes, law enforcement development,
organized crime, and counternarcotics training. Supported by and in cooperation with INL, the
Department of Justice (DOJ), Treasury Department component agencies (including the Financial Crimes
Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC)), the Board
of Governors of the Federal Reserve (FRB), and non-government organizations offered law enforcement
and criminal justice programs worldwide.
During 1997, INL funded numerous programs to combat international financial crimes, including money
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laundering. Nearly every federal law enforcement agency assisted in this effort by providing basic and
advanced training courses in all aspects of financial criminal activity. In addition, many federal agencies
were provided funding to conduct assessments and develop specialized training in identified countries
worldwide.
As in previous years, INL training programs continue to focus on the interagency approach and bring
together, where possible, law enforcement, judicial, and central bank authorities in assessments and
training programs. This approach allows for an exchange of information and a dialogue usually not
undertaken by those attending the training seminars. This approach has proved successful in various
parts of the globe, from Central and South America to Russia, the Newly Independent States (NIS) of
the former Soviet Union, and Central Europe. INL provides funding for many of the training and
technical assistance programs offered by the various law enforcement agencies, including those at the
International Law Enforcement Academy (ILEA) - Budapest.
Customs Service (USCS)
The USCS Office of Investigations (Financial Investigations Branch) is extensively involved in multiagency international money laundering training programs. The USCS has developed and implemented
anti-money laundering and asset forfeiture programs for law enforcement and banking officials in
Argentina, Venezuela, Russia, Vietnam, Indonesia, Cyprus, and Jersey. As participants in the multiagency money laundering assessments, USCS has met with officials in Kazakhstan, Kyrgyzstan,
Uzbekistan, Romania, Cyprus, and Antigua to evaluate the extent of money laundering and to determine
possible training needs.
As co-hosts with the Internal Revenue Service Criminal Investigation Division (IRS-CID), USCS has
conducted money laundering training for officials in Brazil, El Salvador, and Barbados.
USCS also participated in two money laundering and anti-corruption training programs held at the
International Law Enforcement Academy in Budapest, Hungary, for officials from Uzbekistan and
Kazakhstan. In addition, USCS conducted United States Agency for International Development
(USAID) grantee sponsored training for central bank and law enforcement officials in Kiev, Ukraine.
USCS co-hosted with the Drug Enforcement Administration (DEA) money laundering and asset
forfeiture training for law enforcement officials and prosecutors from Mexico, Israel, Costa Rica,
Ecuador, and the Bahamas. USCS has also participated with the US Secret Service in training for
Russian bank officials, customs officers and law enforcement officials.
In addition, USCS has briefed high-level government officials from Panama, Thailand, Italy, Japan,
Paraguay, India, Malaysia, Ireland, Denmark, Singapore and Brazil, as well as the Taiwan authorities,
concerning USCS money laundering programs and initiatives.
Internal Revenue Service (IRS)
The IRS Criminal Investigation Division (IRS-CID) continued to play a significant role in multi-agency
international training and technical assistance programs to foreign law enforcement agencies during the
past year. The training included instruction in financial investigative techniques, utilization of suspicious
activity and currency transaction reports, and management of multi-agency money laundering
investigations.
A Suspicious Activity Report/Currency Transaction Report training seminar was conducted by IRS-CID
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representatives in Mexico for money laundering law enforcement investigators and members of the
Hacienda.
Regional seminars on anti-money laundering were also provided to executives of law enforcement
investigative agencies of Trinidad and Tobago, El Salvador, and Brazil. The focus of these seminars was
to establish an awareness of the overall threat posed from money laundering and its impact on these
regions. The overall goal was to foster an atmosphere of cooperation and exchange between these
countries and the United States in a joint effort to combat global money laundering activities.
IRS-CID conducted a financial investigative techniques course in St. Petersburg, Russia. The
presentation was directed to high and mid-level directors and managers of the Tax Police. This training
was conducted under the auspices of the Freedom Support Act (FSA).
A financial investigative techniques course was also provided to investigative officials of Estonia, Latvia
and Lithuania at the Federal Law Enforcement Training Center (FLETC). This training was conducted
under the auspices of the Support for Eastern European Democracy Program (SEED).
In addition, a financial investigative techniques course was provided in Kiev, Ukraine. The course was
tailored to more advanced programs with special emphasis on computer based investigative techniques.
Also, a financial investigative techniques course was given at FLETC to Russian Tax Police. Both
classes were conducted under the auspices of the FSA.
Federal Law Enforcement Training Center (FLETC)
An international financial fraud training program course was conducted at FLETC for participants from
Thailand, Hong Kong, Brazil, Venezuela, Honduras, and Trinidad and Tobago. The course was
conducted under the auspices of the Internal Revenue Service, Office of Tax Advisory Assistance
Service.
Federal Bureau of Investigation (FBI)
The Federal Bureau of Investigation continues to develop and deliver international training programs for
foreign law enforcement officials in the area of financial crimes, including money laundering, to support
the FBI's international and domestic investigative responsibilities.
In addition to the white collar crime courses conducted at the International Law Enforcement Academy
in Budapest, Hungary, the FBI conducted thirteen money laundering training courses during fiscal year
1997 in Albania, Chile, People's Republic of China, Colombia, the Czech Republic, Egypt, Latvia,
Malaysia, Mexico, Moldova, the Philippines, Romania, and Russia. One practical case training initiative
involving money laundering was conducted in Panama.
Drug Enforcement Administration (DEA)
During fiscal year 1997, the DEA International Training Section (TRI) conducted three asset forfeiture
and money laundering seminars. The three seminars were conducted in Israel, Ecuador, and the
Bahamas. The seminar in Israel was taught in Jerusalem and attended by forty students from Israel and
five students from Cyprus. The seminar in Ecuador was conducted in Quito and attended by thirty-nine
participants from Ecuador, Bolivia, Colombia, Peru, Venezuela, Costa Rica and Panama. The last
seminar was conducted in Nassau, Bahamas, and attended by thirty-nine delegates from throughout the
Caribbean including: the Bahamas, Grenada, the Cayman Islands, St. Kitts, St. Vincent, St. Lucia,
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Aruba, Caracas, Jamaica, Belize, Turks and Caicos, Trinidad and Tobago, Barbados, and the Dominican
Republic.
The funding for these seminars came from the US Department of Justice Asset Forfeiture Fund. In FY
98, DEA/TRI plans to conduct four additional seminars. These seminars would be conducted with
participation from various DEA components (TRI, Financial Investigations Section (HQS), Asset
Forfeiture Section (HQS), DEA field elements) as well as with the DOJ Office of International Affairs,
the US Marshal's Service, and the Customs Service.
Secret Service
The Secret Service continues its involvement in the training of foreign law enforcement officials in the
areas of investigative techniques, types of international fraud schemes, and identification of systemic
weakness in their financial systems that lead to fraudulent financial activity. During 1997, the Secret
Service provided training to foreign law enforcement and banking officials from the following countries:
Russia, Latvia, Estonia, Lithuania, Belarus, Poland, Ukraine, Hungary, Bulgaria, Romania, Moldova,
Slovakia, Czech Republic, Cyprus, Hong Kong, Thailand, Cambodia, Indonesia, Singapore, Laos,
Vietnam, Korea, South Africa, and Mexico.
Financial Crimes Enforcement Network (FINCEN)
FinCEN, the US financial intelligence unit (FIU), has an international training program with two main
components: (1) instruction provided to a vast array of US and foreign government officials, financial
regulators, bankers and others on the subjects of money laundering and FinCEN's mission and operation;
and (2) training in financial analysis and in the creation and operation of FIUs, modeled after FinCEN
and other FIUs throughout the world. FinCEN works closely with other agencies in supporting US
interests overseas by (1) advising foreign government officials on how to establish advanced systems for
detecting, preventing and prosecuting financial crimes; (2) recommending ways in which to develop a
partnership between government and financial institutions to prevent money laundering; (3) offering
specialized training and technical assistance in computer systems architecture and operation; and (4)
providing assessments of money laundering regulations and procedures. While much of FinCEN's
international training is done abroad, increasingly FinCEN is providing training and technical assistance
to foreign officials at its offices in Vienna, Virginia.
In 1997, FinCEN provided an overview of its role and mission in the global fight against financial crime
to delegations visiting from: Argentina, Aruba, Australia, the Cayman Islands, the People's Republic of
China, Colombia, Costa Rica, the Dominican Republic, Ecuador, France, Germany, Ghana, Hong Kong,
India, Ireland, Japan, Mexico, Moldova, the Netherlands, Panama, Paraguay, Poland, Romania, Russia,
Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, Trinidad and Tobago, the United Kingdom,
Uruguay, and Venezuela.
FinCEN worked closely with Mexico and Panama throughout this past year by providing support and
technical assistance to their respective FIUs. FinCEN's technical staff made several trips to Mexico's
Secretaria de Hacienda y Credito Publico (Hacienda) to assess the technological requirements of the
FIU, including the development of a suspicious activity report (SAR) and analytical database. FinCEN
provided specialized intermediate analytical training to the Director of the Mexico FIU, and in
September, six intelligence analysts received intensive overall analytical training on theory, concepts
and process. In addition to FinCEN personnel, trainers from the IRS, USCS, DEA, FDIC, OCC, FRB,
FBI, and New Jersey State Police made presentations that were specifically tailored to meet the training
needs of the participants. In November 1997, FinCEN hosted a delegation of members of Mexico's
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National Banking and Securities Commission (CNBV) and representatives from the Mexico Banker's
Association.
In March 1997, FinCEN provided technical and analytical training to analysts from Panama's financial
analysis unit (FAU). Representatives from the FBI, IRS, DEA, FDIC, OCC, and FRB also provided
training to the delegation from Panama. In September 1997, the Director of the Panamanian FAU
participated in the training provided for the Mexican FIU.
In March 1997, FinCEN and Panama hosted a financial seminar in Vienna, Virginia. Participants
included high-level Panamanian and USG officials from both the private and public sectors, including
law enforcement, regulatory agencies, and banking communities. Use of third party checks, foreign bank
drafts, and money orders as a means of furthering the money laundering process dominated the
discussions. As a follow-up to the seminar, FinCEN and the Panamanian FAU reached an agreement to
conduct a joint study of Panama's Colon Free Trade Zone.
This past year, a Department of Justice legal detailee to FinCEN and senior FinCEN legal and analytical
personnel have provided legal and technical assistance to a number of countries in drafting and revising
their anti-money laundering legislation. These countries included Costa Rica, Ecuador, El Salvador,
Nicaragua, and Venezuela.
In late 1997, a FinCEN representative visited India, Sri Lanka, and Nepal. In India, consultations were
held with government officials involved in the drafting of India's anti-money laundering legislation.
Research was also conducted on the hawala alternate remittance system as part of a joint FinCENINTERPOL/FOPAC study on parallel banking in Asia. Finally, groundwork was laid for the "Asia
Watch" survey of money laundering in South Asia that will be conducted jointly by FinCEN and
INTERPOL/FOPAC in early 1998. In Sri Lanka, FinCEN consulted with senior law enforcement
personnel on draft money laundering legislation. In Nepal, FinCEN worked closely with Embassy
officials in Katmandu to provide detailed assistance to the Nepali officials involved with drafting
Nepal's anti-money laundering legislation. In addition, FinCEN reviewed a proposal for the
establishment of offshore banking facilities in Nepal and conducted research on the Nepali gaming
industry.
FinCEN hosted a delegation consisting of members of the Cyprus Unit for Combating Money
Laundering and a representative of the Central Bank of Cyprus, in which the OCC and FRB also
participated.
FinCEN hosted several visitors from Paraguay's anti-money laundering and anti-drug unit (SENAD) in
September 1997 to discuss technical and training assistance needs for Paraguay's future financial
intelligence unit.
In December 1997, FinCEN sent a working level needs assessment team to Venezuela to meet with
Venezuelan law enforcement, banking, and regulatory officials. The purpose of the visit was to gain a
better understanding of the status of the anti-money laundering legislation and the roles of the various
organizations in Venezuela concerned with combating money laundering and to help FinCEN better
advise the officials of Venezuela on how to establish and operate a financial intelligence unit.
Also in December 1997, FinCEN sent a delegation to Jamaica to meet with Jamaican officials to discuss
their anti-money laundering system and to explore the possibility of providing assistance in developing
an FIU in that country.
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International Law Enforcement Academy (ILEA) - Budapest
Five 12-hour training segments were presented at ILEA in Budapest. These segments provided
instruction in financial investigative techniques and money laundering. They were attended by
participants from the region, including representatives from Hungry, Croatia, and the Former Yugoslav
Republic of Macedonia, Estonia, Latvia, and Lithuania. These courses were a portion of a consolidated
interagency curriculum presented by various US law enforcement agencies during an 8-week period.
Treaties And Agreements
Mutual Legal Assistance Treaties (MLATs) allow generally for the exchange of evidence and
information in criminal and related matters. In money laundering and asset forfeiture cases, they can be
extremely useful as a means of exchanging banking and other financial records with our treaty partners.
MLATs, which are negotiated by the Department of State in cooperation with the Department of Justice,
are in force with the following countries: Argentina, the Bahamas, Canada, Hungary, Italy, Jamaica,
Mexico, Morocco, the Netherlands, Panama, the Philippines, Spain, South Korea, Switzerland,
Thailand, Turkey, the United Kingdom, the United Kingdom with respect to its Caribbean dependent
territories (the Cayman Islands, Anguilla, the British Virgin Islands, Montserrat, and the Turks and
Caicos Islands), and Uruguay. MLATs have been signed but not yet brought into force with another 21
governments: Antigua and Barbuda, Australia, Austria, Barbados, Belgium, Brazil, Colombia, the Czech
Republic, Dominica, Grenada, Hong Kong, Israel, Latvia, Lithuania, Luxembourg, Nigeria, Poland, St.
Kitts and Nevis, St. Lucia, Trinidad and Tobago and Venezuela. The United States is actively engaged
in negotiating additional MLATs around the world. The United States has also signed the Organization
of American States' MLAT.
In addition, the United States has entered into executive agreements on forfeiture cooperation, including:
(1) an agreement with the United Kingdom providing for forfeiture assistance and asset sharing in
narcotics cases, and (2) a forfeiture cooperation and asset sharing agreement with the Netherlands. The
United States has asset sharing agreements with Canada, Colombia, Ecuador, Mexico, and the United
Kingdom on behalf of Anguilla, the British Virgin Islands, the Cayman Islands, Montserrat, and Turks
and Caicos.
Financial Information Exchange Agreements (FIEAs) facilitate the exchange of currency transaction
information between the US Treasury Department and other governments' finance ministries. The
United States has FIEAs with Colombia, Ecuador, Mexico, Panama, Paraguay, Peru, and Venezuela.
FinCEN has a Memorandum of Understanding or an exchange of letters in place to facilitate exchange
of information with the FIUs of the following countries: Argentina, Australia, Belgium, France,
Slovenia, Spain, and the United Kingdom.
The United States has Customs Mutual Assistance Agreements (CMAAs) with the European
Community and with the following countries: Argentina, Australia, Austria, Belarus, Belgium, Canada,
Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy, Japan,
Korea, Mexico, Mongolia, New Zealand, Norway, Poland, Portugal, the Russian Federation, Slovakia,
Spain, Sweden, Ukraine, the United Kingdom, and Yugoslavia. (The US view is that the Socialist
Federal Republic of Yugoslavia (SFRY) has dissolved and that the successors that formerly made up the
SFRY-Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia, Slovenia, and
the Federal Republic of Yugoslavia (Serbia and Montenegro)-continue to be bound by the agreement
with the SFRY at the time of dissolution.) The United States has also concluded CMAAs which are not
yet in force with the following countries: Honduras, Ireland, Kazakhstan, the Netherlands, Turkey, and
Venezuela. In addition, the United States has non-binding CMAAs with both Hong Kong and the United
Kingdom. All of these agreements are patterned after a World Customs Organization Model CMAA.
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Since assistance can be provided under these agreements in the enforcement of any laws related to
customs, the USCS uses these agreements to assist in the gathering of information and evidence for
criminal and civil cases involving trade fraud, smuggling, violations of export control laws, and most
recently, in the growing effort to combat narcotics trafficking and money laundering.
Asset Sharing
Pursuant to the provisions of the 1988 UN Drug Convention, the Departments of Justice, State and
Treasury have aggressively sought to encourage foreign governments to cooperate in joint investigations
of drug trafficking and money laundering, offering the inducement of sharing forfeited assets. A parallel
goal has been to encourage use of these assets to improve narcotics law enforcement. The long term goal
has been to encourage governments to improve asset forfeiture laws and procedures so that they will be
able to conduct investigations and prosecutions against property within their own borders. The United
States and its partners in the Eight (formerly the G-7 industrialized nations plus Russia) are currently
examining ways of strengthening asset forfeiture and asset sharing regimes. To date, Canada,
Switzerland, Jersey and the United Kingdom have shared forfeited assets with the United States.
From 1989 through December 1997, the international asset sharing program, administered by the
Department of Justice, resulted in the forfeiture in the US of $190,275,879 of which $66,096,963 was
shared with foreign governments which cooperated and assisted in the investigations. In 1997, the
Department of Justice transferred forfeited proceeds to: Canada ($84,669); the Cayman Islands
($58,439); Luxembourg ($18,104,348) and the United Kingdom ($244,238). Prior recipients of shared
assets (1989-1996) include: Argentina, the Bahamas, the British Virgin Islands, Canada, the Cayman
Islands, Colombia, Costa Rica, Ecuador, Egypt, Guatemala, Guernsey, Hungary, Israel, Liechtenstein,
Luxembourg, Paraguay, Romania, St. Maarten, Switzerland, the United Kingdom and Venezuela.
Multilateral Activities
Financial Action Task Force (FATF)
The Financial Action Task Force on Money Laundering (FATF), which was established at the G-7
Economic Summit in Paris in 1989, is an inter-governmental body whose purpose is the development
and promotion of policies to combat money laundering. These policies aim to prevent proceeds of crime
from being utilized in future criminal activities and from affecting legitimate economic activities.
The FATF currently consists of 26 jurisdictions and two international organizations. Its membership
includes the major financial center countries of Europe, North America and Asia. The 26 FATF member
countries and governments are: Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece,
Hong Kong, Iceland, Ireland, Italy, Japan, Luxembourg, the Kingdom of the Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United
States. The two international organizations are the European Commission and the Gulf Cooperation
Council. One of the guiding principles of the FATF is that money laundering is a complex economic
crime which cannot be effectively controlled by conventional law enforcement methods alone, and that
finance ministries, financial institutions, and regulators must work closely with law enforcement
agencies in combating money laundering. Accordingly, the FATF is a multi-disciplinary body, bringing
legal, financial and law enforcement experts into the policy-making process.
In 1997, the FATF focused on several major initiatives. Perhaps the greatest achievement during 1997 is
that all FATF members now have anti-money laundering legislation substantially in line with the FATF
40 Recommendations. With the strong encouragement of its FATF co-members, Turkey passed
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significant anti-money laundering legislation and enacted implementing regulations which put the law
into force in 1997.
The FATF's second round of mutual evaluations, which commenced in early 1996 and is currently
underway, is focused on the practical effectiveness of members' anti-money laundering measures and
also assesses follow-up action taken in response to the recommendations for improvement made in the
first round. During 1997, FATF conducted 11 second round mutual evaluations. Denmark, the United
States, Austria, Belgium, Switzerland, Canada, Netherlands, Germany, Italy, Norway and Japan. In
addition, the Gulf Cooperation Council (GCC) agreed to institute a self-assessment program for its
member states. This is a first step in addressing the problem that although the GCC is a FATF member,
the GCC member states are not subject to FATF member requirements.
In February 1997, discussion began on the future of the FATF after 1999. At the Denver Economic
Summit held in June 1997, the G-7 Heads of State issued a Statement which "urged the FATF to review
ways to advance its essential work and consider renewal of its mandate for an additional five-year
period." Specific issues, such as expansion of membership and identification of possible new members,
will be discussed by the FATF in early 1998. The FATF will then provide a report outlining its
conclusions to the G-7 prior to the May 1998 Birmingham Summit.
Importantly, last year, the Society for Worldwide Interbank Financial Telecommunications (SWIFT)
agreed to the FATF proposal to change the SWIFT message format to allow for inclusion of additional
information useful to financial investigators. A major concern for financial investigators in the past had
been the absence of key data in the message format regarding international funds transfers. The previous
SWIFT message format did not include a designated field for the originator's account number (or other
numeric identifier). SWIFT introduced a new and revised SWIFT message format in November 1997,
known as MT 103, that includes a designated field for the originator's account number (or other numeric
identifier). SWIFT will encourage senders to complete this field in their messages. This is an important
success that has been long sought by law enforcement agencies around the globe.
The FATF adopted a policy allowing those international organizations that have agreed to carry out
mutual evaluations of their members and whose evaluation procedures have been validated by the FATF
Plenary to attend the discussions of the FATF mutual evaluation reports and to receive the related
documents. Specifically, the FATF endorsed the mutual evaluation procedures of the Caribbean
Financial Action Task Force (CFATF), the Council of Europe (which will be focusing on those of its
members which are not FATF members), and the Offshore Group of Banking Supervisors (OGBS). The
FATF will provide guidance to these organizations and may issue public statements regarding efforts
made by non-members to combat money laundering. This will further encourage non-FATF members to
adopt the FATF's recommendations and procedures.
In addition, several Multilateral Development Banks, including the International Monetary Fund (IMF)
and the World Bank, are increasingly focusing on anti-money laundering issues, and the FATF has
established a constructive dialogue with them. The FATF has approached these organizations and
attempted to gain their support for inclusion of anti-money laundering programs in their operations.
Other external relations activities included the participation of FATF representatives in the June 1997
United Nations Center for International Crime Prevention's Regional Ministerial Workshop on
Organized Crime in Dakar, Senegal. In September 1997, a FATF mission to Cyprus was conducted to
assess the money laundering situation and measures to combat it. In October 1997, the FATF co-hosted
a money laundering seminar with the Bank of Russia in St. Petersburg. FATF provided a detailed
exposition of anti-money laundering guidelines and recommendations of various FATF member
countries and addressed the issue of cooperation between the financial sector and law enforcement
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authorities. FATF plans to co-host another money laundering seminar with the Black Sea Economic
Cooperation (BSEC) in early 1998.
In June 1997, Mr. Jean Spreutels of Belgium assumed the FATF Presidency for FATF's ninth round of
work (1997-1998). In June of 1998, FATF will continue to work with the private financial services
sector by hosting another Financial Services Forum. The President-Elect for FATF-X (1998-1999) is
Mr. Jun Yokota from Japan's Ministry of Foreign Affairs. This will be the first time an Asian FATF
member will serve as President of the FATF.
During June 1997, FATF established an Internet web site that allows it to reach a much wider audience,
providing access to basic FATF documents, such as the 40 Recommendations and the annual Typologies
Reports on money laundering methods and trends, as well as other key documents on money laundering
(including the 1988 UN Drug Convention, the 19 Aruba Recommendations, and the Riga Declaration),
and other documents of concern to FATF members. The site also serves as a single location in which the
texts of various anti-money laundering statutes and regulations for both FATF and non-FATF members
may be placed. Additionally, users will be able to find still more related information either through links
to other related sites or through contact information provided within the site. The FATF web site can be
found at http://www.oecd.org/fatf.
In 1997, FATF created a regional Ad Hoc Group on Central and Eastern Europe, chaired by the
Netherlands, to support, coordinate and exchange information between the other international
organizations who are conducting anti-money laundering initiatives in the region. There are currently Ad
Hoc Groups on Asia (Australian Chair) and Latin America (French Chair). The regional ad hoc groups
serve as a catalyst for external relations efforts in each particular region and have been instrumental in
creating FATF regional bodies.
An Ad Hoc Group on Estimating the Magnitude of Money Laundering, chaired by FinCEN's Director,
was also established last year to develop a methodology to measure the money laundering problem from
a global perspective. The purpose is to confirm that money laundering is a significant element in the
global financial system and to quantify the amount of money laundering activity. Each participating
country has formed an advisory board of experts for the purpose of identifying the quantifiable sources
of data. This Ad Hoc Group will compile a draft methodology which will be used to develop a
quantifiable estimate of the problem. Several international organizations, including the OECD, IMF,
INTERPOL, Commonwealth Secretariat, and OAS/CICAD, are actively contributing to the work of this
group. Once determined, this figure will allow policy makers and the public, through press reporting, to
appreciate the critical value of anti-money laundering programs and their relationship to ensuring the
integrity of the global financial system.
In November 1997, the FATF concluded a highly successful meeting on money laundering typologies.
The purpose of the typologies exercise is to provide a forum for law enforcement experts-those
primarily tasked with combating money laundering-to discuss recent trends in the laundering of criminal
proceeds, emerging threats, and effective countermeasures. Discussions focused primarily on new
payment technologies, remittance services and the use of non-financial businesses in money laundering
schemes. Money laundering countermeasures were also discussed in greater detail than in prior years.
Overall, FATF jurisdictions found that conventional money laundering methods are still being used with
refinements being made to existing techniques. In addition, as new countermeasures are developed,
money launderers continue to shift from traditional financial institutions to non-financial businesses. As
in the past two years, the FATF will produce two versions of the typologies report-an internal version
and a public version. The public version of the report is expected to be issued in early 1998.
Asia Pacific Group on Money Laundering (APG)
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In order to make progress in the external relations work of the Financial Action Task Force (FATF), an
"FATF Asia Secretariat" was created in 1994 to set up a regional anti-money laundering body in the
Asia/Pacific region. The United States has been working with the FATF to create regional anti-money
laundering groups to form an international alliance against money laundering. Through the results of the
FATF Asia Secretariat and other FATF members, the Asia Pacific Group on Money Laundering (APG)
was formally established in February 1997 at the Fourth Asia/Pacific Money Laundering Symposium in
Bangkok, Thailand. Initial membership of the group consists of Australia, Bangladesh, Hong Kong,
Japan, New Zealand, People's Republic of China, Philippines, Singapore, Sri Lanka, Taiwan, Thailand,
the United States, and Vanuatu. The establishment of this group is a positive step toward recognizing
that money laundering is a significant international issue that affects the Asia/Pacific region and that
jurisdictions within the region need to cooperate in combating money laundering.
The APG will meet twice yearly to provide a focus for regional anti-money laundering efforts and will
work in close cooperation with the FATF and the CFATF. The first goal of this group is to develop a
statement of principles and measures for application within the region.
The Fourth Asia/Pacific Money Laundering Symposium also resulted in a set of proposed
recommendations and a consensus that money laundering is a serious threat that must be addressed
globally. Participants recognized that money laundering undermines the integrity of the region's
financial institutions and that anti-money laundering controls have a positive effect on economic growth
by attracting legitimate investments and capital. There was agreement that bank secrecy laws should not
interfere with the ability to ensure the integrity of financial institutions and that central banks and
Finance Ministries play a very important role. It was also recognized that the offense of money
laundering should cover all serious crimes.
In July 1997, the first meeting of the APG's Working Party was held in Beijing, China. The Working
Party developed a work program and a statement of principles and measures for application within the
region in relation to money laundering. The Working Party agreed that the APG accepts the FATF 40
Recommendations in principle as the "international standard" and discussed how they can be applied in
the region. The APG will have members complete anti-money laundering "jurisdiction reports" which
will include each jurisdiction's relevant laws as well as identify what training is needed.
In 1997, the Asia Pacific Economic Cooperation (APEC) continued to express support for anti-money
laundering initiatives. The APEC Finance Ministers issued a Joint Ministerial Statement on April 6,
1997 which supported the establishment of the APG. The anti-money laundering text of that statement
follows:
Anti-Money Laundering. Money laundering remains a priority concern because of the threat it can pose
to the integrity of legitimate financial institutions. In this regard, we welcome the establishment of the
Asia-Pacific Group on Money Laundering of which several APEC economies are members. We pointed
out however that money laundering is a global phenomenon and in this regard, we encourage all other
economies to join in a determined global effort to effectively address it . We ask the assistance of the
relevant international organizations to integrate support for anti-money laundering activities in their
operations to strengthen the integrity of financial systems.
Caribbean Financial Action Task Force (CFATF)
The Caribbean Financial Action Task Force (CFATF) continues its important anti-money laundering
initiatives in the region. The CFATF requires its member jurisdictions to implement the FATF 40
Recommendations as well as an additional 19 recommendations specific to the region that CFATF
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adopted (the Aruba 19 Recommendations). Barbados currently chairs the organization, and Attorney
General David Simmons will serve as Chairman until October 1998. The Cayman Islands has been
elected as the next CFATF chair. The Secretariat of the CFATF is housed in Trinidad and Tobago.
In October 1996, the CFATF adopted a Memorandum of Understanding (MOU) which formalizes the
organization by delineating its mission, objectives, and membership requirements. Since November
1996, the following have been CFATF members: Anguilla, Antigua and Barbuda, Aruba, the Bahamas,
Barbados, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, Costa Rica, the Dominican
Republic, Grenada, Guatemala, Montserrat, the Netherlands Antilles, Nicaragua, Panama, St. Lucia, St.
Vincent and the Grenadines, Turks and Caicos, and Trinidad and Tobago. In October 1997, Jamaica and
Venezuela subscribed to the CFATF MOU, and in December 1997, Dominica subscribed as well,
raising the organization's membership to a total of 24 members. Additional countries are expected to
sign the MOU in the near future. There has been no change in membership of the five Cooperating and
Supporting Nations (Canada, France, the Netherlands, the United Kingdom, and the United States),
which have provided financial and other support to CFATF since its inception.
The pace of CFATF's activities has continued to increase. In 1997, CFATF conducted mutual evaluators
of four of its members (the Dominican Republic, Barbados, St. Vincent and the Grenadines, and the
Bahamas). Six additional CFATF mutual evaluations are scheduled to occur in 1998: Antigua and
Barbuda, Turks and Caicos, Bermuda, St. Lucia, St. Kitts and Nevis, Nicaragua.
In July 1997, CFATF and FinCEN co-sponsored a Casino Regulatory Conference in Aruba as part the
CFATF typologies exercise. The conference identified vulnerabilities to money laundering within the
gaming industry and as well as minimum regulatory and legislative standards needed to address those
vulnerabilities. Representatives from Aruba, the Bahamas, Belize, Brazil, the British Virgin Islands,
Canada, Cayman Islands, Chile, Colombia, Costa Rica, Dominica, the Dominican Republic, France,
Jamaica, the Netherlands Antilles, Panama, Peru, St. Lucia, the Netherlands, Trinidad and Tobago, the
United Kingdom, the US Virgin Islands, Uruguay, the United States, and Venezuela attended the
conference.
CFATF also completed two typologies exercises, which are used to assess current trends in money
laundering in the Caribbean and to develop effective countermeasures. The first typologies exercise
focused on domestic financial institutions, and the second addressed the casino and gaming industry in
the region.
The CFATF will play a leading role in implementing the joint US- EU anti-money laundering training
and technical assistance initiative for the Caribbean. This comprehensive program, covering financial,
legal, law enforcement, and regulatory measures, is the culmination of a number of efforts to develop a
regional training and technical assistance program by the US, EU, CFATF, and UNDCP. At the
December 1997 regional meeting held in the Dominican Republic to review the progress in
implementing the May 1996 Barbados Plan of Action, the participants agreed, in the Santo Domingo
Declaration, to implement the regional anti-money laundering project through CFATF in association
with the EC, the US, and other cooperating and supporting countries. Funding to implement this project
has been committed jointly by the European Commission and the United States government. The
CFATF Council is to determine the location of the project office by March 1, 1998, and it is anticipated
that the training and technical assistance program activities will begin as early as 1998.
Summit of the Americas Follow-Up
With respect to the money laundering issue, the Summit of the Americas in Santiago, Chile in April
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1998 will focus on measures needed to support the Inter-American Drug Abuse Control Council of the
OAS (OAS/CICAD) in its efforts to adopt and implement the December 1995 Buenos Aires
Communiqué Plan of Action on money laundering.
OAS/CICAD
In recognition of the growing importance of money laundering issues and the need to develop a
framework to assist member governments in implementing the provisions of the Buenos Aires
communiqué, the OAS/CICAD reconvened the CICAD Experts Group to Control Money Laundering in
June 1996. Substantive discussion of regional money laundering issues now regularly occurs within this
Experts Group under the OAS framework.
In its most recent meeting in Santiago in October 1997, the Experts Group made a number of significant
recommendations, which were officially adopted by the OAS/CICAD in its November 1997 meeting in
Lima, Peru. Among the recommendations of the Experts Group were:
* To amend, for the first time, the OAS Model Regulations on money laundering by adding language
which encourages governments to establish Financial Intelligence Units (FIUs) in accordance with the
Egmont Group definition.
* To harmonize the OAS Model Regulations with the provisions of the Summit of the Americas Buenos
Aires Communiqué Plan of Action, and to examine the Model Regulations to determine if the Model
Regulations need to be revised further in order to keep them abreast of new money laundering methods.
* To formulate a comprehensive training and technical assistance plan to assist governments in their
efforts to implement the provisions of the 1995 Buenos Aires Communiqué Plan of Action. This training
plan will include provisions for training and technical assistance in the financial sector, for FIUs, and for
law enforcement personnel, judges, magistrates and prosecutors.
The Experts Group agreed to conduct a yearly typologies exercise to determine the money laundering
methods being utilized in the hemisphere by sharing experiences in dealing with this problem. Annual
typologies reports will be produced.
An initial analysis of member responses to the CICAD Self-Assessment Questionnaire (used to
determine progress in implementing the Buenos Aires Communiqué Plan of Action) was produced and
an English text will be widely circulated in the near future.
Finally, progress also continues on the joint Organization of American States/Inter-American
Development Bank Anti-Money Laundering Training and Technical Assistance Initiative. It is expected
that the IDB will provide funding in 1998 for a pilot project focused on "know your customer" policies
and reporting of suspicious transactions for banking regulators and key management positions within
financial institutions as well.
Financial Intelligence Units (FIUs) and the Egmont Group
Over the past five to seven years, a number of specialized governmental agencies have been created as
countries develop systems to deal with the problem of money laundering. These entities are commonly
referred to as "financial intelligence units" or "FIUs". These units have attracted increasing attention
with their ever more important role in anti-money laundering programs.
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How FIUs Differ from Other Anti-Money Laundering Agencies
The FIU concept has developed rapidly during the past two years. In spite of the specialized nature of
such units, there has often been some confusion between FIUs "financial intelligence units" and other
official entities with seemingly similar responsibilities. Police units established for the purpose of
investigating financial and white-collar crime-to include money laundering-have often been dubbed
"financial investigative units" with the acronym "FIU". These units certainly play an important and
useful role in their countries' overall anti-money laundering effort; however, the simple designation
"FIU" does not necessarily mean that the unit functions as defined by the Egmont Group.
A number of countries have resolved this confusion by continuing to call the purely police unit an
"FIU" ("financial investigative unit"), while terming the intelligence unit an "FAU" ("financial analysis
unit"). Making this distinction then allows some countries to avoid the word "intelligence" (which has a
somewhat negative connotation in certain areas) by focusing on the function of the unit rather than the
material with which it works.
An FIU, quite simply, is a central office that obtains financial disclosure information, processes it in
some way and then provides it to an appropriate government authority in support of a national antimoney laundering effort. Although the definition states that the activities performed by an FIU include
"receiving, analyzing, and disseminating" information, it does not exclude other activities that may be
performed on the basis of this material. Therefore, an FIU could conceivably perform the activities
mentioned in the definition and investigate and/or prosecute violations indicated by the disclosures.
The creation of FIUs has been shaped by two major influences: law enforcement and detection:
* Law Enforcement: Most countries have implemented anti-money laundering measures alongside
already existing law enforcement systems. Certain countries, due to their size and perhaps the inherent
difficulty in investigating money laundering, decided to provide a clearinghouse for financial
information. Agencies created under this impetus were designed, first and foremost, to support the
efforts of multiple law enforcement or judicial authorities with concurrent or sometimes competing
jurisdictional authority to investigate money laundering.
* Detection: Through the FATF 40 Recommendations and regional organizations initiatives such as the
European Union, the Council of Europe, CFATF, and OAS/CICAD, the concept of suspicious
transaction disclosures has become a standard part of money laundering detection efforts. In creating
transaction disclosure systems, some countries saw the logic in centralizing this effort in a single office
for receiving, assessing and processing these reports. FIUs established in this way often play the role of
a "buffer" between the private financial sector and law enforcement and judicial/prosecutorial
authorities. This has, in some cases, fostered a greater amount of trust in the anti-money laundering
system with the FIU serving as the honest broker between the private and government sectors.
Over time, FIUs in the first category have tended to add the disclosure receiving function to their list of
attributions. Moreover, regulatory oversight has also increasingly become a function of a number of
FIUs. Since a disclosing requirement mandates the receiving agency to deal with the disclosing
institution, it was logical that some FIUs would become primary forces in working with the private
sector to find ways to perfect anti-money laundering systems.
The Egmont Group
Despite the fact that several FIUs were created throughout the world in the early 1990s, their creation
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was at first seen as individualized phenomena related to the specific needs of the jurisdictions
establishing them. Since 1995, a number of FIUs have begun working together in an informal
organization known as the Egmont Group (named for the location of the first meeting at the EgmontArenberg Palace in Brussels). The goal of the Group is to provide a forum for FIUs to find ways of
improving support to their respective national anti-money laundering programs. This support includes
expanding and systematizing the exchange of financial intelligence information, improving expertise
and capabilities of personnel of such organizations, and fostering better communication among FIUs
through application of technology. Within the Egmont Group, working groups are focused on three
major areas: legal matters, technology, and training.
Recent Egmont Meetings
The fourth meeting of the Egmont Group took place on November 21-22, 1996 in Rome, Italy. With
over thirty countries in attendance, along with four international organisations, the Egmont Group
moved one step closer to becoming the primary framework for co-operation among FIUs. The Egmont
Group examined the functions of the various FIUs and similar agencies so as to determine those
missions and functions that are carried out in common. The conference came to an agreement on the
definition of an FIU, a definition that will likely facilitate the establishment of new units by setting a
minimum standard for such a unit.
According to this definition, a financial intelligence unit is "a central, national agency responsible for
receiving (and, as permitted, requesting), analysing [sic] and disseminating to the competent authorities,
disclosures of financial information: (i) concerning suspected proceeds of crime, or (ii) required by
national legislation or regulation, in order to counter money laundering."
The purpose of defining an FIU was to develop a specific identity for the Egmont Group as distinct from
FATF or other international organizations concerned with money laundering. The definition was meant
to be specific enough to describe these apparently distinct agencies from other types of government
authorities, yet generic enough to include the many variations as found in the countries establishing such
units. The definition also specifically avoids emphasizing any particular type of organization (i.e.,
police, judicial, administrative, or regulatory). Since its adoption, the definition appears to have become
a standard against which newly forming units are being measured.
The fifth meeting of the Egmont Group took place on June 23-24, 1997 in Madrid, Spain. There were 35
countries and 5 international organisations present at this meeting. The Egmont Group took a significant
step forward in several areas. Perhaps the most important of these was the adoption by the Group of its
Statement of Purpose, which describes the work accomplished so far, as well as current goals within the
framework of assisting national and international anti-money laundering efforts. The FIU definition
adopted in Rome was applied to all participating agencies-28 of them were found to meet it-and this
definition was incorporated into the Statement of Purpose. A comprehensive Egmont Group training
program for FIU personnel began to take shape over the course of the conference. Finally, the Egmont
Group decided to study ways to continue enhancing information exchange among FIUs and ultimately
create a more formalized structure for the Group itself. The next meeting of the Egmont Group is
scheduled to be held in Buenos Aires, Argentina in June 1998.
Secure Information Exchange: The Egmont Secure Web
The effort to increase communication among FIUs has been furthered by development of a secure web
site or "virtual private network" that was first demonstrated in Rome. This web site permits Egmont
FIUs to access information on other FIUs (missions, organisations, and capabilities), money laundering
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trends, financial analysis tools, and technological developments. It also permits the participating FIUs to
communicate by means of a secure electronic mail system. Since the web site is not accessible to the
public, FIUs may share certain types of sensitive information in this protected environment, a capability
that is not available anywhere else for FIUs. The "Egmont Secure Web" became operational in February
1997, when FinCEN and four European FIUs (from Belgium, the Netherlands, the United Kingdom, and
France) became the first units to be connected. Connections to the FIUs in Spain, Sweden, and Slovenia
in May 1997 were followed by those to the units in the Czech Republic, Slovakia, and Austria in August
1997. Monaco was connected to the web site in November 1997, bringing the total number of units online to twelve. More connections will be made as units already meeting the Egmont Group FIU
definition acquire appropriate software and computer configurations.
Other International Conferences and Multilateral Activities
In early 1997, a FinCEN paper entitled "Black Hawala, Financial Crimes and the World Drug Trade"
was presented at a conference on Global Drugs Law sponsored by the United Nations Drug Control
Program (UNDCP) and the Indian Law Institute (ILI). This paper was well received, and has
subsequently been published by the ILI.
In April 1997, the United States government and INTERPOL co-hosted a conference in Buenos Aires
on the Analysis of Financial Records. Presentations included case studies dealing with money
laundering from law enforcement and banking personnel. Representatives from Argentina, Aruba,
Australia, the Bahamas, Barbados, Belgium, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica,
Denmark, the Dominican Republic, Ecuador, France, Germany, Guinea, Haiti, India, Italy, Japan,
Mexico, the Netherlands, Panama, Paraguay, Peru, St. Lucia, Spain, the United Kingdom, the United
States, Uruguay, and Venezuela attended the conference.
In October 1997, the United States government gave presentations and chaired the Law Enforcement
Workshop at the FATF and Bank of Russia Money Laundering Seminar. The seminar provided
guidance to Russian law enforcement, financial, regulatory, and banking officials on the establishment
of effective money laundering controls within Russia.
Money Laundering Comparative Chart
Each year, US officials from the various agencies with anti-money laundering responsibilities meet to
assess the money laundering situations in more than 200 nations and territories, including steps taken or
not taken to address those situations, each jurisdiction's vulnerability to money laundering, the
conformance of its laws and policies to international standards, the effectiveness with which the
government has acted, and the government's political will to take needed actions.
The 1998 INCSR assigns priorities to more than 150 nations and territories, using a new classification
system consisting of three differential categories titled Countries of Primary Concern, Countries of
Concern, and Other Countries Monitored. The 1997 INCSR used a system of six categories titled High
Priority, Medium-High Priority, Medium Priority, Low-Medium Priority, Low Priority, and No Priority.
The 1998 INCSR collapses the six 1997 INCSR categories into the new three-tiered system for clearer
classification and ease of comparison. In the conversion, the former High Priority and Medium-High
Priority categories have become the new Countries of Primary Concern category. The former Medium
Priority and Low-Medium Priority categories have become the new Countries of Concern category, and
the former Low Priority and No Priority categories have become the new Other Countries Monitored
category. This conversion is designed to facilitate presentation to the reader. It does not represent any
change whatsoever in the analyses of the money laundering situations in the various jurisdictions.
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INCSR priorities draw upon a number of factors which indicate: (1) the extent to which the jurisdiction
is or remains vulnerable to money laundering, notwithstanding its money laundering countermeasures, if
any; (2) the nature of the money laundering situation in each jurisdiction (for example, whether it
involves drugs or other contraband); (3) the ways in which the US regards the situation as having
international ramifications; (4) the situation's impact on US interests; (5) whether the jurisdiction has
taken appropriate legislative actions to address specific problems; (6) whether there is a lack of licensing
and oversight of offshore banks and businesses; (7) whether the jurisdiction's laws are being effectively
implemented; and (8) where US interests are involved, the degree of cooperation between the foreign
government and US government agencies. There are approximately two dozen sub-factors that are also
considered. These sub-factors (Category Criteria) are explained below.
Note: A government can have comprehensive laws on its books and conduct aggressive anti-money
laundering enforcement efforts, but still be prioritized as a Primary Concern jurisdiction if the volume of
money laundering continues to be substantial and/or continued vigilance and effective enforcement by
the government is essential to the effectiveness of the overall international effort.
When the severity of the money laundering problem places a jurisdiction in the Primary Concern
category and other deficiencies exist, this categorization indicates that this jurisdiction needs to take
immediate action to develop or enhance its anti-money laundering regime and will receive near-term
priority attention from the US government. In categorizing a jurisdiction as a Primary Concern
jurisdiction, the US belief is that near-term remedial action by that jurisdiction is needed to address the
problems cited in the individual country summaries or reflected in the Comparison Table. Jurisdictions
categorized in the Countries of Concern category need to develop or to review their anti-money
laundering regimes, including their offshore licensing, supervisory and regulatory authorities, for
enhancement to protect their financial systems from criminal abuse. Jurisdictions in the Other Countries
Monitored category are not of immediate concern, but they will be monitored for changes in their money
laundering activity.
Category Criteria
As any financial system can be penetrated, every country and territory has the potential of becoming a
money laundering center. There is no precise measure of vulnerability for any financial system, but a
checklist of what drug money managers reportedly look for provides a basic guide.
* Failure to criminalize money laundering from all serious crimes or limiting the offense to narrow
predicates, such as prior conviction of a drug trafficking offense.
* Rigid bank secrecy rules that cannot be penetrated for authorized law enforcement investigations or
that prohibit or inhibit large value and/or suspicious or unusual transaction reporting by both banks and
non-bank financial institutions.
* Lack of adequate "know your client" requirements to conduct financial transactions, or allowed use of
anonymous, nominee, numbered or trustee accounts.
* No requirement to disclose the beneficial owner of an account or the true beneficiary of a transaction.
* Lack of effective monitoring of cross-border currency movements.
* No reporting requirements for large cash transactions.
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* No requirement to maintain financial records over a specific period of time.
* No mandatory requirement to report suspicious transactions or a pattern of inconsistent reporting
under a voluntary system; lack of uniform guidelines from which to identify suspicious transactions.
* Use of bearer payable monetary instruments.
* Well-established non-bank financial systems, especially where regulation, supervision, and monitoring
are lax.
* Patterns of evasion of exchange controls by nominally legitimate businesses.
* Ease of incorporation, especially where ownership can be held through nominees or bearer shares, or
where off-the-shelf corporations can be acquired.
* No central reporting unit for receiving, analyzing and disseminating to the competent authorities, large
value, suspicious or unusual transaction financial information that might identify possible money
laundering activity.
* Limited or weak bank regulatory controls, or failure to adopt or adhere to the Basle Principles for
International Banking Supervision, especially in countries where the monetary or bank supervisory
authority is understaffed, underskilled or uncommitted.
* Well-established offshore or tax-haven banking systems, especially countries where such banks and
accounts can be readily established with minimal background investigations.
* Extensive foreign banking operations, especially where there is significant wire transfer activity or
multiple branches of the foreign banks, or limited audit authority over foreign-owned banks or
institutions.
* Limited asset seizure or confiscation capability.
* Limited narcotics and money laundering enforcement and investigative capabilities.
* Countries with free trade zones where there is little government presence or other supervisory
authority.
* Patterns of official corruption or a laissez-faire attitude toward the business and banking communities.
* Countries where the US dollar is readily accepted, especially countries where banks and other
financial institutions allow dollar deposits.
* Well-established access to international bullion trading centers in New York, Istanbul, Zurich, Dubai
and Mumbai.
* Countries where there is a significant trade in or export of gems, particularly diamonds.
* Countries with large parallel or black market economies.
* Limited or no ability to share financial information with foreign law enforcement.
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Changes In INCSR Priorities, 1997-1998
Upgrades
Australia
Bahamas
Burma
France
Guernsey
Indonesia
Jersey
Lebanon
The Isle of Man
Albania
Barbados
British Virgin Islands
Cook Islands
El Salvador
Ireland
North Korea
Marshall Islands
Nauru
Romania
Samoa
Seychelles
Turks and Caicos
Ukraine
Vietnam
Yugoslavia FR
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
Medium Priority - Country of Primary Concern
No Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
No Priority - Country of Concern
No Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
No Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
Low Priority - Country of Concern
Downgrades
Argentina
Kuwait
Cuba
Montserrat
Medium-High Priority - Country of Concern
Medium Priority - Other Countries Monitored
Low-Medium Priority - Other Countries Monitored
Low-Medium Priority - Other Countries Monitored
The following comparative table identifies the actions taken by each of the governments to combat
money laundering. This reference table provides a comparison of a broad range of elements which
define legislative activity and identify other characteristics that can have a relationship to money
laundering vulnerability.
Glossary of Terms
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1. "Criminalized Drug Money Laundering": The government has enacted laws criminalizing the offense
of money laundering related to drug trafficking.
2. "Criminalized Beyond Drugs": The government has extended anti-money laundering statutes and
regulations to include non-drug-related money laundering.
3. "Record Large Transactions": By law or regulation, banks are required to maintain records of large
transactions in currency or other monetary instruments.
4. "Maintain Records Over Time": By law or regulation, banks are required to keep records, especially
of large or unusual transactions, for a specified period of time, e.g., five years.
5. "Report Suspicious Transactions": By law or regulation, banks are required to record and report
suspicious or unusual transactions to designated authorities. This is indicated by an "M" for Mandatory
in the column. A "P" indicates that by law or regulation, banks are permitted to record and report
suspicious transactions. An effective know-your-customer policy is considered a prerequisite in this
category.
6. "Financial Intelligence Unit": The government has established a central, national agency responsible
for receiving (and, as permitted, requesting), analyzing, and disseminating to the competent authorities,
disclosures of financial information concerning suspected proceeds of crime, or required by national
legislation or regulation, in order to counter money laundering. These reflect those countries that have
met the Egmont definition of an FIU.
7. "System for Identifying and Forfeiting Assets": The government has enacted laws authorizing the
tracing, freezing, seizure and forfeiture of assets identified as relating to or generated by money
laundering activities.
8. "Arrangements for Asset Sharing": By law, regulation or bilateral agreement, the government permits
sharing of seized assets with third party governments which assisted in the conduct of the underlying
investigation.
9. "Cooperates w/Domestic Law Enforcement.": By law or regulation, banks are required to cooperate
with authorized law enforcement investigations into money laundering or the predicate offense,
including production of bank records, or otherwise lifting the veil of bank secrecy.
10. "Cooperates w/International Law Enforcement": By law or regulation, banks are permitted/required
to cooperate with authorized investigations involving or initiated by third party governments, including
sharing of records or other financial data.
11. "International Transportation of Currency": By law or regulation, the government, in cooperation
with banks, controls or monitors the flow of currency and monetary instruments crossing its borders. Of
critical weight here are the presence or absence of wire transfer regulations and use of reports completed
by each person transiting the country and reports of monetary instrument transmitters.
12. "Mutual Legal Assistance": By law or through treaty, the government has agreed to provide and
receive mutual legal assistance, including the sharing of records and data.
13. "Non-Bank Financial Institutions": By law or regulation, the government requires non-bank financial
institutions to meet the same customer identification standards and adhere to the same reporting
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requirements that it imposes on banks.
14. "Disclosure Protection 'Safe Harbor'": By law, the government provides a "safe harbor" defense to
banks or other financial institutions and their employees who provide otherwise confidential banking
data to authorities in pursuit of authorized investigations.
15. "Offshore Financial Centers": By law or regulation, the government authorizes the licensing of
offshore banking facilities.
16. "States Parties to 1988 UN Drug Convention": The country is a party to the 1988 United Nations
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, or the country that is
responsible for the jurisdiction's international relations has extended the application of the Convention to
the jurisdiction.
17. "Compliance w/UN Convention": The government is meeting the goals of the 1988 UN Drug
Convention by effectively applying implementing legislation.
See Money Laundering Country Chart
See Comparative Rankings Charts
Country Reports
Afghanistan (Other). Civil war in Afghanistan appears to have destroyed most of the country's
primitive banking infrastructure. Afghanistan plays a key role in the heroin trade. The proceeds of that
trade appear to be laundered either outside of the country or through the hawala alternative remittance
system. If Afghanistan's financial infrastructure is rebuilt according to Islamic banking principles, the
cash-fee nature of Islamic banking could create additional vulnerabilities to money laundering.
Albania (Concern). The collapse of the Albanian economy and ensuing civil strife in the first half of
1997 resulted directly from pyramid schemes in which a significant portion of Albanian households lost
their life savings. Albanian nationals resident in Italy, the Federal Republic of Yugoslavia (FRY), and
the Former Yugoslavia Republic of Macedonia (FYROM) suffered similar losses; A FYROM bank
collapsed as a result of investing in Albanian pyramid schemes. These schemes were in effect operating
as non-bank financial institutions by accepting deposits in contravention to the revised Law of the Bank
of Albania of early 1996, which restricted the acceptance of deposits to licensed banks. In February
1997, Italian police alleged Mafia involvement in the pyramid schemes as a means for laundering illicit
proceeds from the smuggling of narcotics, tobacco, arms, and illegal aliens. A number of investigations
were initiated by Italian authorities based on organized crime connections in Italy and Albania. Evidence
gathered from these investigations suggested that the pyramid schemes were used to launder illegal
proceeds from trafficking in narcotics, arms, and illegal aliens.
Albanian assessments confirm press accounts that organized crime influence is pervasive and wellentrenched in the Albanian economy, particularly in the smuggling of petroleum products, arms, and
non-ferrous metals. Ethnic Albanian organized crime groups, operating out of the Kosovo region of
(FRY), as well as Albania, act on an international scale in the trafficking of narcotics and illegal aliens.
Albania faces many difficulties in combating the prevalence of financial crime and it presents few
obstacles to the laundering of illegal proceeds. Organized crime groups are well-financed, well-armed,
and have state-of-the-art communications, as well as strong ties to Russian and Italian crime groups.
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Enforcement authorities lack the basic tools and experience to conduct financial investigations. The
Minister of Interior called for major reforms to the judicial system, which he described as plagued by
corruption and heavily influenced by organized crime. Although Article 287 of the Albanian Criminal
Code criminalized all forms of money laundering and criminal procedures provide for the confiscation
of the instrumentalities of money laundering and the equivalent of proceeds of crime, these measures are
not enforced by prosecutorial and judicial authorities.
On a positive note, Prime Minister Nano has promised to investigate organizations suspected of money
laundering and the central bank governor plans to reduce bank susceptibility to criminal groups.
However, the banking sector remains relatively unstable; most banks are performing poorly due to a
decline in deposits and prior bad investments. With the exception of one privately owned bank,
Albania's banks are fully or partly state-owned. In order to attract bank deposits, the central bank
governor has focused on insuring safety and soundness of the banking sector by precluding the illegal
practices associated with the pyramid schemes. In addition, a draft bill on the banking system being
prepared by the Ministry of Finance contains provisions for the prevention of money laundering in
Article 23. It mandates the reporting of suspicious transactions and bank cooperation with enforcement
authorities responsible for combating money laundering.
Full stabilization of the Albanian financial system will require the enactment of a legislative basis for an
effective anti-money laundering regime and the dedication of resources by Albania. Albania must pass
such laws and focus on developing the infrastructure to enforce them, so that assistance from other
nations in anti-money laundering enforcement can be usefully applied.
Algeria (Other). Algeria is a party to the 1988 UN Drug Convention. However, it has enacted no laws
against money laundering. There is a requirement that any foreign currency brought into the country be
declared upon entry, but it is not clear how strictly this is enforced. The methods and magnitude of
money laundering is difficult to determine, partly because of the political unrest in the country. New
foreign investment is minimal at present.
Anguilla (Other). Over the past few years Anguilla has greatly increased oversight of its financial
sector through the enactment and enforcement of bank supervisory legislation. In addition, since the
early 1980's Anguilla has sharply reduced the number of licensed banks. As a result of the
modernization of the legislative framework and resulting enhanced oversight of the banking industry,
the number of licensed banks has fluctuated somewhat, but now holds at four. Of this total, three are
commercial banks serving the Anguillan market and one is an offshore bank that provides services to
non-residents.
In 1994, Anguilla provided the base for a US sting operation, Operation Dinero, that exposed the
vulnerabilities of the offshore banking industry to money laundering. The operation led to the seizure of
9 tons of cocaine and USD 90 million worth of assets. Anguillan officials responded by enacting new
financial services legislation and enforcing strict licensing requirements to deter foreign investors from
abusing the tax incentives and strict privacy privileges granted offshore banks
Anguilla is moving to enact new legislation to compete with the BVI and other high-volume locations
using International Business Corporations. As Anguilla attempts to increase revenues from expanding its
offshore sector, diligent oversight will be required to combat potential abuse of the industry by money
launderers.
Antigua and Barbuda (Primary). Despite the December 1996 enactment of a comprehensive money
laundering prevention bill, Antigua, with an active offshore financial services industry, a growing
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Internet gaming industry, stringent bank secrecy and limited regulatory capabilities, continues to be one
of the most attractive financial centers in the Caribbean for money launderers. As such, Antigua has a
growing international reputation as a haven for dirty money. The 1996 law criminalizes the laundering
of the proceeds for specified serious crimes (blackmail, counterfeiting, drugs, extortion, false
accounting, forgery, fraud, illegal deposit taking, robbery, terrorism, and theft), imposes record keeping
by banks and non-bank financial institutions, mandates the reporting of suspicious financial transactions,
and provides for the creation of a Supervisory Authority to receive and analyze the reports of suspicious
financial transactions. The law allows for the forfeiture of any property, proceeds or instrumentality's
derived from or connected to money laundering upon the conviction of the defendant. The law also
creates a mechanism for international legal assistance and possible asset sharing.
Although the enactment of the money laundering prevention law was a positive step, in 1997, the
Government of Antigua and Barbuda (GOAB) failed to take adequate steps to effectively implement this
critical anti-money laundering initiative. The GOAB has not yet created and staffed the Supervisory
Authority mandated by the law, and the Ministry of Finance has not issued regulations or created
mechanisms to implement the mandated suspicious financial transaction reporting. The GOAB has not
yet issued regulations to implement the mandated outbound currency reporting and has not yet issued
forms for declaring large currency and negotiable instruments. The GOAB needs to establish effective
customs and regulatory controls at ports of entry and departure. In 1997, the GOAB engaged the
services of a US firm to assist in implementing its efforts to control money laundering. Enforcement
action was hindered by a GOAB decision to delay implementing basic money laundering controls until
after the US firm delivered its report.
Antigua has an active offshore financial services industry which continues to be largely unregulated.
This loosely-regulated environment had led, in recent years, to a substantial increase in the number of
offshore banks registered in Antigua. Several of these banks have links to Russia and many to offshore
entities in other jurisdictions, generating growing concern about investors and depositors of questionable
origin. In July 1996, at the request of the GOAB, British authorities reviewed Antigua's offshore
incorporating statute and found numerous deficiencies such as an inadequate reserve requirement, no
notification provisions for a change in beneficial ownership of an offshore entity, no provision to revoke
an entity's license and no independent vetting of applications for bank licenses. In November 1996, the
Antiguan government, faced with ever increasing international criticism of its offshore banking industry,
agreed to suspend the issuance of offshore banking licenses until better vetting procedures were
established and to raise the bank reserve capitalization requirements. In contravention of these
assurances, made by senior Antiguan officials to the US, the government licensed three new offshore
banks in 1997. The GOAB is now conducting a review of the bona fides of existing offshore banks, and
has stated that those banks which do not provide audited financial statements, records regarding
beneficial owners, and other requested information will be closed. Five banks have been reportedly
closed or sent closure notices.
In February 1997, Donald Ray Gamble, a director of Caribbean American Bank (CAB), an offshore
bank licensed in Antigua, was convicted in the Middle District of Tennessee of laundering
approximately USD 3.4 million in advanced fee fraud proceeds through CAB. In December 1997, Larry
Glynn Sangaree, an officer of CAB, was convicted in the Northern District of Florida of conspiracy to
commit money laundering for his participation in the fraud and money laundering scheme. The victims
of the fraud scheme were required to wire transfer funds to CAB in Antigua. The moneys were then wire
transferred from CAB's bank account at American International Bank in Antigua to the defendants' bank
accounts in the United States.
In August 1997, the Antiguan-licensed European Union Bank (EUB) collapsed. The two Russian
founders of EUB absconded with approximately USD 10 million of depositors' funds. After they left
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Antigua, and the bank ceased operations, the GOAB revoked EUB's license and issued a fraud alert on
the two bank owners. Subsequently, in September 1997, USG law enforcement officials assisted the
Antiguan authorities in examining the bank records of EUB. US investigators were given limited access
to the bank records due to Antigua's strict bank secrecy laws which protect the confidentiality of
depositors except in cases of a violation of Antiguan law.
Since April 1994, US Department of Justice attorneys have attempted to work with the GOAB to
enforce a May 1994 criminal forfeiture order for USD 7.5 million entered by the United States District
Court in Boston against John E. Fitzgerald, a convicted racketeer and drug money launderer. Instead of
enforcing the forfeiture order, the GOAB appears to have obtained the funds from Swiss American Bank
where the funds were on deposit. A large portion of funds were then transferred directly into the national
treasury. Repeated requests by the US to Antigua for explanations and documents have gone
unanswered, except for representations that the relevant bank records had disappeared in a hurricane. In
December 1997, the USG filed suit against Swiss American Bank to recover the USD 7.5 million.
The pace of change has been disappointing given the GOAB's stated commitment to enforce its money
laundering prevention bill and its participation in the Caribbean Financial Action Task Force. Political
will is a major factor in achieving effective enforcement. To overcome its vulnerabilities, the GOAB
must focus its efforts to implement fully the money laundering prevention bill, develop adequate
regulations for and ensure compliance in licensing offshore banks, and enhance money laundering
detection efforts.
Argentina (Concern). Argentina has not yet developed into a major money laundering center.
However, money laundering occurs both in the banking system and in non-bank financial institutions.
The Government of Argentina (GOA) continues to intensify its efforts towards combating money
laundering. The legislation introduced in September 1996, "The Legitimization of Assets", however,
was not enacted and will need to be resubmitted in 1998. This legislation, drafted by the Secretariat for
the Prevention of Drug Abuse and Narcotics Trafficking (SEDRONAR) and the Ministries of Justice
and Economy, proposes to extend the predicate offenses that will support a money laundering charge
beyond drugs offenses to include terrorism, trafficking in humans and human organs, and crimes against
public administration. It would mandate the reporting of suspicious transactions by banks and a widespectrum of financial institutions, establish a financial information unit (FIU), an interagency money
laundering commission. The FIU will receive the reports of suspicious transactions, initiate money
laundering investigations, and forward the cases for prosecution. Its members would include officials
from the Secretaries of Justice, SEDRONAR, Intelligence, Internal Security, the Ministry of Economy
and Public Services, and the Central Bank.
In 1996 and 1997, the Central Bank of Argentina issued several communications which form a
comprehensive set of regulations to safeguard the financial system from abuse by criminals. Central
Bank Communications A2433, A2451, A2469, A2509, and A2627 require financial institutions to
refrain from cashing third-party or bearer checks of more than USD 50,000, report bank accounts which
move more than USD 200,000 per month or USD 500,000 per year, and maintain records for five years
of all transactions of USD 10,000 or more. Strict customer identification requirements are in place and
guidelines were issued to assist in the identification of suspicious money laundering activities. Financial
institutions are required to provide the central bank quarterly reports of transactions which appear
unusual or without economic or legal justification. In 1997, the Securities and Exchange Commission
(SEC) issued Resolution 288/97 mandating that securities dealers report accounts which move USD
50,000 or more in a month or USD 200,000 or more in a year. The SEC will share this information with
the central bank.
In April 1997, Argentina hosted the Sixth meeting of the Interpol and the Financial Crimes Enforcement
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Network (FinCEN) Working Group on the Analysis of Financial Records. In September 1997, the US
Customs Service and other US Government (USG) agencies conducted a week long money laundering
training seminar at SEDRONAR for approximately 200 GOA law enforcement and judicial officers.
SEDRONAR will host the next plenary meeting of the Egmont Group of FIUs in June 1998.
Armenia (Other). Armenia's banking system is still relatively weak and the economy is largely cash
based. Neither institutional nor legal mechanisms are currently adequate to protect against money
laundering. However, due to its limited financial services sector, there is no indication at this time that
money laundering is a serious problem. Money laundering is not criminalized under Armenian law.
Armenia should consider adopting anti-money laundering laws to protect its banks from criminal abuse
through financial crimes and money laundering.
Aruba (Primary). The Government of Aruba (GOA) continued its progress in its anti-money
laundering efforts. Of particular importance was the publication of the four Aruban-Dutch Mixed
Commission Reports on the Free Zone, the Gaming Industry, the Import, Export & Transit of Cash
Money, and Legal Entities. The GOA has accepted each of the recommendations of the four
Commissions and the drafting of legislation and regulations to implement the recommendations is
currently underway. The recommendations include tightening the supervision of the Free Zone, the
gaming industry, and the offshore sector, strengthening the requirements for licensing of Free Zone
companies, casinos, and offshore entities, establishing customer identification procedures in these
sectors, extending the ordinance requiring the reporting of unusual transactions to the Free Zone and the
gaming industry, and establishing large value currency cross-border reporting.
The GOA has criminalized money laundering beyond drugs, records large transactions, maintains
records over time, and has unusual transaction reporting requirements. However, Aruba has yet to
prosecute any money laundering cases. The GOA also established a financial intelligence unit, referred
to as Meldpunt Ongebruikelijke Transacties - Aruba (MOT - Aruba), in 1996 to receive and analyze
unusual transaction reports. As Aruba's FIU, MOT - Aruba participates in the Egmont Group of FIUs.
In July, Aruba hosted a two day conference entitled "Casino Regulatory Conference: Money Laundering
Risks". This conference was the first to concentrate on anti-money laundering safeguards for Caribbean
area casinos.
On October 1, 1997, a new criminal procedure code was enacted in Aruba. On October 3,1997, the
Government of Aruba arrested Randolph Habibe, Eric Mansur and David Cybul, all three of whom were
subjects of provisional arrest requests of the United States which had been forwarded to the Acting
Attorney General of Aruba. Alex Mansur who was also a subject of a provisional arrest request was out
of the country when the arrest warrant were executed but turned himself in to the Aruban authorities on
October 3, 1997.
David Cybul was indicted in the Northern District of Florida in October 1992 and charged under a
Superceding Indictment with conspiracy to import cocaine and marijuana and conspiracy to distribute
cocaine and marijuana. Randolph Habibe was indicted in the Southern District of Florida in December
1993 and charged with conducting a continuing criminal enterprise, conspiracy to import cocaine and 4
counts of money laundering. Eric and Alex Mansur were indicted in 1994 in Puerto Rico for their role in
an international criminal organization involved in drug trafficking and money laundering. The Mansurs
are charged with violation of Title 18, United States Code, Section 1956(h), conspiracy to launder the
proceeds of drug trafficking.
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The provisional arrests of these four individuals by the Aruban authorities are especially important as
they are the first Aruban nationals ever arrested in Aruba for possible extraditions to the United States.
As result of many discussions with the Arubans and the Dutch about these extradition matters, the
Arubans made the necessary legislative changes to their penal code which would allow the arrest and
extradition of Aruban nationals. This new penal code only became effective on October 1, 1997, and the
provisional arrests were made almost immediately upon the new code's effective date. While the
extradition of these individuals must still be decided by the Aruban courts, the provisional arrests
indicate Aruba's willingness to cooperate with the United States in law enforcement matters.
Aruba does not yet have a comprehensive set of laws for identifying and forfeiting assets, although a
draft forfeiture law is currently pending before the Parliament. The extension of the 1988 UN Drug
Convention to Aruba must await adoption of the proposed asset forfeiture law.
Australia (Primary). Australia has a balanced, comprehensive system to detect, prevent and prosecute
money laundering, assessed as a multi-billion dollar business due to its sophisticated financial services
sector. Australia's system includes money laundering legislation, cash transaction reporting legislation,
and mutual assistance legislation designed to counter money laundering activities. The Customs Act of
1901 and the Proceeds of Crimes Act (POCA) of 1987 allow for asset forfeiture and seizure in narcotics
cases. The Mutual Assistance in Criminal Matters Act and the Extradition Act of 1988 are also
significant in that they provide Australia with a modern extradition regime and a law allowing mutual
assistance in the investigation and prosecution of criminal matters. Under the Financial Transaction
Reporting Act, financial institutions are required to identify their customers. When a cash transaction
exceeds AUD 6,600, these institutions must file a Significant Cash Transaction Report with the
Australian Transactional Analysis Center (AUSTRAC). Most of the major financial institutions conduct
electronic filings directly to AUSTRAC. These Acts have enabled Australia to enter into a network of
extradition and mutual assistance treaties, which are of great importance in the battle against money
laundering. Australia and the United States signed a mutual legal assistance treaty in 1997, which is now
awaiting the advice and consent to ratification of the United States Senate.
Australia has also taken an active role in international fora concerning money laundering. Australia
serves as the FATF Asia/Pacific Secretariat to the Asia/Pacific Group on Money Laundering. Apart
from participation in the work of the FATF and the Asia/Pacific Group, Australia took an active role in
money laundering at the World Ministerial Conference on Organized Transnational Crime in 1994, and
will be working to ensure that effective action is taken by the UN Commission on Crime Prevention and
Criminal Justice to implement the Action Plan adopted at the conference. Australia has been involved in
the work of the British Commonwealth nations in combating money laundering, and it is likely that
Australia's role in this forum will increase over time. AUSTRAC, Australia's financial intelligence unit
(FIU), participates in the Egmont Group of FIUs.
Austria (Primary). While Austria has taken a number of commendable measures over the past few
years to address money laundering, all of its efforts are overshadowed by the continued existence of
anonymous passbook accounts. Further, Austria's tradition of financial sector secrecy and its
geographical location have made it attractive for illicit activity from individuals of nearby countries.
Despite recent legislature changes designed to bring Austria more fully in compliance with European
Union norms, Austria may continue to be vulnerable to money laundering.
Until 1996, Austria permitted anonymity in two types of accounts. Recently they abolished anonymous
securities accounts for all new accounts, in compliance with European Union (EU) regulations and
FATF recommendations, but continued to allow anonymity for passbook savings accounts. During
1997, the EU commission decided to initiate proceedings in the European Court of Justice against
Austria because it has continued to permit anonymous passbook savings accounts.
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The government of Austria (GOA) believes that money laundering via anonymous passbook savings
accounts is minimal because of the restrictions on these accounts. The accounts are theoretically only
available to citizens and permanent residents of Austria, withdrawals require a personal appearance and
can only be made in cash, and wire transfers are not permitted from these accounts. Bankers are opposed
to the abolition of anonymous passbook savings accounts because they fear that account holders will
transfer money out of the country to avoid taxes and because the task of identifying ownership of the 26
million accounts will be formidable. However, retention of these accounts is directly contrary to FATF
Recommendation 10.
Both transactions over 200,000 ATS (approx. USD 17,000) and all suspicious transactions must be
reported by financial institutions to EDOK - Meldstelle, (the financial intelligence unit) within the
Federal Criminal Police. Bureaux de change are subject to the Banking Act, but it is unclear whether
these controls apply to other non-bank financial institutions. Customer identification measures are in
place, as well as the requirement to maintain records, but there are no cross-border currency regulations.
New regulations took effect in March 1997, providing for asset seizure, forfeiture of illicit proceeds and
penalization of newly defined crimes. Strengthened provisions for confiscation and seizure are contained
in Article 20 of the Penal Code. These provisions declare that any economic benefit obtained by the
perpetrator of an offense from or for the commission of the offense should be taken away from him.
They allow for third parties to pay a confiscation order if they have obtained an economic benefit from
the offense.
In September 1997, Austria agreed to modify some bank practices to help limit potential money
laundering. It has been reported that the Finance Ministry informed representatives of the banks,
lawyers, notaries, trustees and real estate brokers of its decision to withdraw the common note of
interpretation in Article 40 of the Banking Act as agreed between the Ministries of Finance and Interior
and the Banking Association. This note had allowed these individuals to file a declaration stating that
they knew the third party (beneficiary) and that there was no suspicion of money laundering. The
withdrawal of the old guidance note continues to be opposed by lawyers, while notaries were agreeable
and have already started identifying their customers.
A new Federal Securities Supervisory Authority was also established in 1997 to supervise banks and
investment firms for their compliance with insider trading regulations and rules of conduct. The
authority also licenses certain types of investment firms and supervises them for their compliance with
Articles 39-41 of the Banking Act. These firms were not previously supervised.
Austrian casinos are not required to report suspicious transactions, and there are no other anti-money
laundering measures in this sector. The GOA has no immediate plans to correct the casino situation
since there is no indication that any harmonized action against casinos will occur within the FATF.
Austria became a party to the 1971 and 1988 UN Drug conventions and the Council of Europe
Convention on Money Laundering in 1997. Ratification of all three conventions had been delayed for
years pending adoption of comprehensive changes in national legislation, including a penal code
amendment and a new narcotics drug law.
Austria signed an Mutual Legal Assistance Treaty (MLAT) with the United States in 1995. The United
States Senate gave its advice and consent to ratification of the treaty in 1996, and it was sent to the
Austrian parliament for ratification in November, 1997.
Austria is a member of the FATF and underwent its second mutual evaluation earlier this year. As part
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of the EU, Austria is subject to EU anti-money laundering norms, notably directive 91/308/EEC. EDOK
- Meldestelle, as Austria's FIU, participates in the Egmont Group of FIUs.
The absence of specific money laundering controls or a reporting requirement for suspicious
transactions for non-bank financial institutions and businesses such as casinos, attorneys, antique shops,
real estate brokers, import-export business, and other similar enterprises remains the most significant
loophole for potential money launderers in Austria. Enhancement of money laundering controls in these
areas is necessary to provide adequate anti-money laundering coverage for Austria.
Azerbaijan (Other). Economic factors and institutional weaknesses allow the laundering of domestic
sources of illegal proceeds. Azerbaijan is a conduit for narcotics, illegal aliens, and other contraband
which produce a steady source of illegally derived proceeds. The potential for increased money
laundering activity is significant, considering the economic potential of Azerbaijan's vast natural
resources and the strong presence of organized crime. A weak legal system, police and judicial
corruption, and an absence of anti-money laundering measures have created a climate favorable to
money laundering and other financial crimes.
The Commonwealth of the Bahamas (Primary). The Bahamas is an attractive target for money
launderers due to its status as an important financial center, its large offshore banking center with over
350 offshore banks and 58,000 international business corporations (IBCs), and its strong bank secrecy
laws. Money laundering is occurring in the Bahamas, as demonstrated in several recent investigations
conducted by the Royal Bahamas Police Force (RBPF) Drug Enforcement Unit (DEU). Further, Russian
banks are reportedly attempting to establish operations in the Bahamas.
The Government of the Commonwealth of the Bahamas (GCOB) has demonstrated a dedicated
commitment to combat money laundering through the passage of comprehensive anti-money laundering
legislation and the implementing regulations in 1996. These regulations are seen as part of a strong antimoney laundering regime, without which the impact of the GCOB's anti-money laundering law was
limited. The enactment of this law and implementing regulations permitted the Bahamian DEU to
conduct several money laundering investigations in 1997.
The Central Bank of the Bahamas issued guidance notes to financial institutions on money laundering,
during December 1996, that explained in clear and plain language how to apply the Commonwealth's
comprehensive new anti-money laundering law. The central bank has also established a unit within the
bank to monitor compliance of financial reporting requirements. In November, the GCOB submitted its
anti-money laundering controls to a mutual evaluation by the Caribbean Financial Action Task Force
(CFATF).
Continued supervision and enforcement of the off-shore banking sector, including strict licensing
background checks, are necessary to discourage infiltration of organized crime and money launderers.
Bahrain (Concern). Once one of the Gulf's fastest growing financial capitals, Bahrain has experienced
economic stasis in recent years and is in relative decline as a regional banking and investment center. In
1992 and 1993, the government introduced various incentives to foreign investment, such as the
elimination of personal, corporate and withholding taxes, a lack of restrictions on the repatriation of
profits, and rebates on land, rent and power charges. Nonetheless, government bureaucracy and the
absence of institutional reform remain a deterrent to foreign investment. Bahrain also has a number of
Islamic banks, which generate profits through fees, rather than interest. These fees are often paid in cash
Bahrain has not yet passed any anti-money laundering laws, and, although it is a party to the 1988 UN
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Drug Convention, it is not considered to be in compliance with the Convention's goals. The Bahrain
Monetary Agency, Bahrain's central bank, has an Inspection Directorate with fairly wide powers.
However, it is not known to what extent this organization takes steps to prevent money laundering or to
address instances of suspected money laundering. Bahrain is represented at the FATF by the Gulf
Cooperation Council (GCC), of which it is a member, and will participate in a FATF assessment process
carried out by the GCC.
Bahrain must enact anti-money laundering legislation to protect its financial system from criminal
activities and money laundering. The next steps required for Bahrain are the enactment of such laws,
implementation of regulations, and the development of the infrastructure to enforce them.
Bangladesh (Other). Bangladesh is not an important South Asian financial center. Smuggling and
narcotics trafficking are thought to take place on a small scale. Since banking regulations, controls, and
supervision are not strong, the Bangladeshi banking system could be used to launder proceeds from
illegal activities. The extent to which the financial system is used for money laundering cannot be
confirmed, but is thought to be small at this time.
Barbados (Concern). Barbados has not historically had a significant money laundering problem.
However, accounts of Russian money flowing into Barbados from other offshore locations and
indications that Italian organized crime is attempting to buy resorts on the island demonstrate the
possible risks as Barbados moves forward with intensifying its current anti-money laundering efforts.
The Barbadian offshore financial services industry continues to expand, driven largely by Canadianbased companies. Offshore bank laws and enforcement, backed by exchange control regulations which
limit the outflow of cash, provide a tool to defend against money laundering. Close supervision of the
growing offshore industry and the international business companies is needed.
Offshore banking is regulated under the Off-Shore Banking Act of 1980, to ensure that only reputable
entities are licensed to operate in Barbados. The regulators in their country of origin are contacted so as
to inform Barbados officials as to the reputability of the applicant. In 1990, the Government of Barbados
(GOB) criminalized money laundering in the Proceeds of Crime Act., No. 13. In March 1997, the GOB
issued anti-money laundering guidelines for licensed financial institutions, which includes reporting of
suspicious transactions, customer identification and maintenance of records of all transactions for five
years. However, there is no requirement for banks to disclose large cash transactions (only to record
them and make them available for police investigations). Also, cooperation of the financial institutions
with law enforcement is mixed and could be strengthened, for example, through a financial intelligence
unit to monitor reporting and record-keeping obligations.
Barbados and US authorities cooperate closely in the fight against narcotics trafficking and other forms
of transnational crime. In 1996, the United States and Barbados signed a mutual legal assistance treaty
(MLAT) and an updated extradition treaty, both of which are awaiting the advice and consent to
ratification of the United States Senate. In May 1997, Barbados hosted a summit of 15 Caribbean
nations, attended by President Clinton, to reaffirm common values and interests, re-invigorate a
partnership for prosperity and security, and address more effectively the common threat of destabilizing
international crime, including drug trafficking and money laundering. Barbados was evaluated by
CFATF in September 1997.
Strong offshore bank laws and enforcement, backed by existing currency controls, provide a defense
against money laundering. In 1997, Barbados made progress in strengthening current laws on money
laundering. New legislation has been drafted and was being circulated for comment at year end. The
GOB hopes to submit the anti-money laundering legislation to Parliament in January 1998. A national
committee formed to examine money laundering controls and efforts continued to be active.
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Belarus (Other). With the exception of illegally acquired funds transiting Belarus from Russia and
other Newly Independent States of the former Soviet Union (NIS), Belarus does not attract foreign
sources of illicit proceeds. Domestic sources of illegal proceeds derived from organized crime and
corruption remain a significant problem. These proceeds are tied to the trafficking of narcotics, arms,
illegal aliens and radioactive materials. In June 1997, a law was adopted to combat corruption and
organized crime. This law was strengthened by a presidential edict issued in October to combat
terrorism and serious violent crime. Provisions of the law and edict require security and enforcement
agencies to combat money laundering. In addition, the presidential edict specifically solicits the National
Assembly of Belarus to expedite consideration of draft legislation on a new criminal code and on state
security agencies. The edict calls on the Security Council to draft anti-money laundering legislation.
Belgium (Concern). Belgium is a traditionally strong financial center and has sound anti-money
laundering legislation in place. It is continuously looking for ways to strengthen money laundering
counter-measures. Belgian authorities cooperate bilaterally on money laundering issues with the US as
well as with other European countries. Money laundering in Belgium has been criminalized and antimoney laundering measures have been in place since 1993. Belgian law requires customer identification,
along with employee training programs to detect suspicious activity, and a safe harbor provision is also
included to protect those individuals and institutions who abide by the reporting requirements.
Suspicious transaction reporting is required, and reports are passed to the financial intelligence unit,
Cellule de Traitement des Informations Financières (CTIF) or Cel voor Financiële Informatieverwerking
(CFI), for processing and transmitting of information relating to money laundering. CTIF/CFI refers any
case of alleged money laundering to the Belgian Royal Prosecutor.
Belgium's active financial sector is heavily engaged in foreign exchange, making it a target of money
launderers. One source of money laundering in Belgium is carried out by drug trafficking organizations
operating in Europe. A large amount of non-drugs money laundering is related to organized crime.
Belgi