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Financial Crimes and Money Laundering Report

1. Summary. Rwanda is not considered a major financial center. Since recovering from the 1994 genocide and war, Rwanda's banking system has been controlled by the government and is now in the process of privatization. The system lacks the efficiencies of more modern banking systems. However, with advancing stability in the country, Rwanda could become a greater risk as its banking system develops and countries like Kenya or Tanzania become less hospitable to money launderers. END SUMMARY.

2. There have been no documented reports of money laundering in Rwanda, primarily due to the government's monitoring through the central bank of monetary transfers totaling more than $50,000, whether internal or international transfers. The authority for this is granted in the Rwandan banking act of 2000. Embassy has no knowledge of Rwandan financial institutions engaging in international narcotics trafficking transactions. On the other hand, post is not aware of Rwanda entering into bilateral agreements for the exchange of information on money-laundering with other countries. Since Rwanda has been the recipient of large amounts of foreign assistance, the IMF and the world bank provide some monitoring of the banking sector, particularly with regard to government spending. In addition, the majority of charitable and non-profit entities are recipients of international aid and are largely monitored by their donors, the IMF and/or the World Bank.

3. There has been significant evidence of the government of Rwanda (GOR) indirectly engaging in mineral transfers from the Congo during the Rwandan occupation of the eastern Congo that ended in the fall of 2002. The National Bank of Rwanda (BNR) and the Rwandan private sector federation (the Rwandan equivalent of the chamber of commerce) both confirmed the large amounts of Rwandan profits obtained from the processing of coltan from 1999 through 2001. According to the BNR, the profits reportedly peaked at $3 million in customs fees and banking profits in a two-month period in 2000. These profit helped fuel the Rwandan GDP growth rate of 9% for 2002. Neither organization could confirm significant transactions in Congolese diamonds.

4. For the past two years, Rwanda has been completely overhauling its legal system. Additional legislation will be presented to the newly elected parliament. Potential loopholes remain in the legal system. These include a lack of provision for the prosecution of potential money laundering cases, antiquated laws governing information technology crimes, and, in the area of imports and exports, a lack of regulation except post-checks on transferred goods. According to legal experts with the Rwandan finance ministry and the prosecutor general's office, no laws under consideration would curb secrecy in respect to client and ownership information in either domestic or offshore financial transactions. Additionally, there are no laws in place concerning banker negligence or the forfeiture and seizure of assets in cases involving narcotics trafficking, serious crimes or terrorists. In addition, no arrests for money laundering or terrorist financing have occurred in Rwanda since January 1, 2003. On December 5, 2003, the cabinet decided to establish a unit within the ministry of internal security to fight global terrorism.

5. Rwanda is officially committed to locate and freeze terrorist assets identified by the international community. However, Rwanda has yet to develop fully its laws and its ability to enforce regulations against terrorist financing in accordance with UN security council resolution 1373. The Government of Rwanda does, however, retain the power to identify, freeze, and seize terrorist finance-related assets. The ministry of finance circulates lists of identified individuals and organizations included on the UN 1267 sanctions committee's consolidated list, and Rwanda is a party to the 1999 international convention for the suppression of the financing of terrorism. To date no traffickers, organized crime elements, or terrorist organizations have taken retaliatory action in Rwanda.

6. The government of Rwanda cooperates with the United States when requested in connection with investigations and proceedings related to narcotics, terrorism, terrorist financing, and other serious crimes. For example, the Rwandan National police's (RNP) economic crimes division has recently cooperated with the USG in check embezzlement investigations that have led to arrests in Uganda. However, the RNP lacks the experience, training, and resources to be effective in investigating and enforcing laws concerning modern money laundering and terrorist financing. Furthermore, no formal body of laws or regulations concerning this cooperation currently exists in Rwanda, although Rwanda is a party to the 1998 UN convention against illicit traffic in narcotics, drugs and psychotropic substances.