Information provided in the 2007 U.S. Department of State (DoS) report indicates that in 2006 the Venezuelan authorities took several measures to counter money laundering. The report notes that the 2005 Organic Law against Organized Crime (Organic Law) brought about improvements in the anti-money laundering regime in Venezuela by improving the investigative and prosecutorial capabilities of the authorities and enhancing the asset forfeiture regime. The Organic Law criminalizes money laundering and defines terrorism as a crime against public order according to the U.S. DoS report. However the report notes that with regards to the financing of terrorism there is no law establishing terrorist financing as a separate crime and there are inadequate measures for freezing terrorist assets. The Organic Law, according to the 2007 U.S. DoS report, is deficient in that it failed to establish the financial intelligence unit (Unidad de Inteligencia Financiera, or UNIF) as an autonomous agency. Further, the UNIF and the Superintendent of Banks and Other Financial Institutions (Superintendencia de Bancos y Otras Instituciones Financieras, or SUDEBAN) -- the regulator of the financial sector -- is viewed by the financial sector as a political tool in the hands of the government and thus lacks credibility. Apart from the 2007 U.S. DoS report, there is insufficient information as to Venezuela's compliance with the Financial Action Task Force's (FATF) Forty plus Nine Recommendations.

General Overview

The 2007 U.S. Department of State (DoS) report titled "International Narcotics Control Strategy Report 2007" indicates that, in 2006, the government of Venezuela initiated several measures to augment its anti-money laundering regime. The 2005 Organic Law against Organized Crime (hereafter referred to as Organic Law) expanded the investigative and prosecutorial authority of law enforcement and the judiciary and improved the asset forfeiture system in the country. However, the report adds that, owing to the omission of sections of the Organic Law relating to the independence of the Financial Intelligence Unit (Unidad de Inteligencia Financiera, or UNIF), the Organic Law lacks the credibility it would have otherwise had.

Through provisions of the 2005 Organic Law, Venezuela has criminalized money laundering. According to the 2007 U.S. DoS report, the Organic Law "expanded Venezuela's mechanisms for freezing assets tied to illicit activities." The report goes on to state that there is no law establishing terrorist financing as a separate crime, and there are inadequate measures for freezing terrorist assets. On the other hand, the Organic Law does define terrorism as a crime against public order and proscribes punishment with up to 20 years in prison for this kind of crime.

The Organic Law (2005) and Resolution 333-97 of the SUDEBAN specifies strict customer identification requirements and thresholds for reporting currency transactions which, according to the 2007 U.S. DoS report, apply to all banks, insurance and reinsurance companies, savings and loan institutions, financial rental agencies, currency exchange houses, money remitters, money market funds, capitalization companies, frontier foreign currency dealers, all casinos, real estate agents, construction companies, car dealerships, hotels and the tourism industry, travel agents, and dealers in precious metals and stones.

Venezuela's financial intelligence unit (FIU) is the Unidad Nacional de Inteligencia Financiera (UNIF), which the 2007 DoS report describes as part of the Superintendent of Banks and Other Financial Institutions (SUDEBAN). The UNIF has a staff of 55 and is a member of the Egmont Group (a coordinating body for the international group of financial intelligence units). However, the DoS report cautions that the SUDEBAN and the UNIF have "little credibility within the financial sector, with credible reports indicating that both are used by the government to investigate political opponents." The DoS report notes that Venezuela's UNIF has signed bilateral information exchange agreements with counterparts worldwide. Moreover, the report notes that "the Government of Venezuela is party to the 1988 United Nations Conventions against Illicit Traffic in Narcotic Drugs and Psychotropic Substances and Transnational Organized Crime, the UN International Convention for the Suppression of the Financing of Terrorism, and the OAS Inter-American Convention Against Terrorism, and has signed, but not yet ratified, the UN Convention against Corruption."

The Principles

1. Legal Systems and Related Institutional Measures

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There is insufficient information publicly available directly addressing Venezuela's compliance with this principle. However, in its 2007 report titled "International Narcotics Control Strategy Report 2007," the U.S. DoS notes that Venezuela has criminalized money laundering with the passage of the 2005 Organic Law. The report indicates that money laundering is an autonomous offence, punishable by time in prison, and asserts that the Organic Law "expanded Venezuela's mechanisms for freezing assets tied to illicit activities." However, the report goes on to note that the Organic Law has yet to result in any significant seizures of assets or successful money laundering prosecutions. Taken together, the Organic Law and the Law Against the Trafficking and Consumption of Narcotics and Psychotropic Substances brings Venezuela's laws in line with the 1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Venezuela is a party to UN Convention against Transnational Organized Crime. The 2007 DoS report observes that there is no Venezuelan law establishing terrorist financing as a separate crime and there are inadequate measures for freezing terrorist assets. Nonetheless, the Organic Law does identify terrorism as a crime against public order and defines punishments of up to 20 years in prison for this kind of crime.

Venezuela's financial intelligence unit, known as UNIF, is part of the supervisory agency known as SUDEBAN, to which the 2007 DoS report attributes a staff of 55. UNIF is part of the Egmont Group. However, The DoS report notes that SUDEBAN and the UNIF have "little credibility within the financial sector, with credible reports indicating that both are used by the government to investigate political opponents." The report goes on to state that the 2005 Organic Law has improved the investigative and prosecutorial capabilities of law enforcement in Venezuela, but that by omitting the legal designation of UNIF as an autonomous agency, the credibility of Venezuelan legislation and the UNIF have both been undermined. The DoS report fruther notes that plans for establishing a General Commission Against Organized Crime have not yet been fulfilled.

2. Preventive Measures - Financial Institutions

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The Organic Law (2005) and Resolution 333-97 of the Superintendent of Banks and Other Financial Institutions (SUDEBAN) specify strict customer identification requirements and thresholds for reporting currency transactions which apply to all banks, insurance and reinsurance companies, savings and loan institutions, financial rental agencies, currency exchange houses, money remitters, money market funds, capitalization companies, frontier foreign currency dealers etc, according to the 2007 U.S. DoS report. In addition, the report notes that financial institutions are required to file suspicious transaction reports and cash transaction reports with the UNIF, as well as to maintain their records for five years. The report adds that the UNIF sends those STRs that need further review (about 30% of the total) to the Public Ministry (the Office of the Attorney General).

A major deficiency in Venezuela's regulatory environment in Venezuela, in the estimation of the U.S. DoS report, is the government's failure to separately criminalize terrorist financing. Despite the descriptive information provided in the 2007 U.S. DoS report, however, there is insufficient information publicly available as to Venezuela's compliance with this principle.

3. Preventive Measures - Designated non-Financial Business and Professions

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The Organic Law of 2005 sets forth strict customer identification requirements and thresholds for reporting currency transactions which apply to all casinos, real estate agents, construction companies, car dealerships, hotels and the tourism industry, travel agents, and dealers in precious metals and stones. Nonetheless, there is insufficient information publicly available as to Venezuela's compliance with this principle.

4. Legal Person and Arrangements & Non-Profit Organizations

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There is insufficient information publicly available as to Venezuela's compliance with this principle.

5. National and International Co-operation

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According to information provided in the 2007 U.S. DoS report, "the UNIF has been a member of the Egmont Group since 1999 and has signed bilateral information exchange agreements with counterparts worldwide." Moreover the Government of Venezuela is party to the 1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, the UN Convention against Transnational Organized Crime, the UN International Convention for the Suppression of the Financing of Terrorism, and the OAS Inter-American Convention Against Terrorism, and, according to the 2007 DoS Report, has signed, but not yet ratified, the UN Convention against Corruption. Nonetheless, there is insufficient information publicly available as to Venezuela's compliance with this principle.