Key Reports 2006

International Narcotics Control Strategy Report 2006

Released by the Bureau for International Narcotics and Law Enforcement Affairs
March  2006

INTRODUCTION

Belarus

DRUG AND CHEMICAL CONTROL

I. Summary

Belarus continues to grow in importance as a drug-transit country. Local drug use and drug-related crime rates continue to increase. Belarus does not produce drugs for export, though it may be a source of precursor chemicals. With the help of other nations and organizations, Belarus is improving its efforts to combat drug abuse and trafficking, but corruption, and lack of organization, funding and equipment continue to hinder progress. Belarus receives counternarcotics assistance from the EU UNDP program BUMAD (Belarus, Ukraine, Moldova Anti-Drug Program), which seeks to reduce trafficking of drugs into the European Union. The program, which just launched phase two of its three part project, seeks to develop systems of prevention and monitoring, improve the legal framework, and provide training and equipment. It is the most significant counternarcotics program in Belarus at this time. Belarus is a party to the 1988 UN Drug Convention.

II. Status of Country

Drugs increasingly transit Belarus on their way to points east, west and north due to Belarus' porous borders and good railway and road system. This trade is facilitated by Belarus' customs union with Russia, and the resultant lack of border controls between Belarus and Russia. The formation of the Eurasian Economic Community (Belarus, Russia, Kazakhstan, Kyrgyz Republic, and Tajikistan) has the potential to create a broader border-free area, which would further facilitate all types of trafficking. There is no evidence of large-scale drug production in Belarus. The potential exists for Belarus to have a problem with illicit synthetic drug production because of its ample production facilities and the current lack of oversight controls. The completely government-owned chemical industry is allowed to police itself. According to law enforcement officials in neighboring countries, Belarus is a source of precursor chemicals, but officials in Belarus deny this.

III. Country Actions Against Drugs in 2005

Policy Initiatives. Belarus' counternarcotics strategy initiative (The State Program of Complex Measures Against Drug and Psychotropic Substances Abuse and Their Illicit Trafficking for 2001-2005) expired last year. This program aimed to launch preventative and rehabilitation strategies and to suppress illegal trafficking. Government officials confess, however, that the program lacked details of implementation, timeframes, as well as sufficient financial support. The Ministry of Interior had primary responsibility for its implementation, which was never entirely completed. Other institutions involved in reducing drug demand include the Ministry of Health, Ministry of Foreign Affairs, Ministry of Education, Committee on State Security (BKGB), and the State Customs Committee. The State Program will not be renewed. Instead, drug abuse prevention will be incorporated into the Belarusian government's overall national program against crime. While interdepartmental rivalry profoundly inhibits cooperation, Belarus has made some strides in restructuring government agencies to enhance information gathering on drugs. Under the Ministry of Health, the government of Belarus created the legal framework for a National Observatory on Drugs, which aims to link 19 government agencies in order to collect and analyze illicit drug abuse statistics in an effort to combat drug trafficking on a regional level. The Collective Security Treaty Organization launched the first stage of the international anticrime operation "Channel 2005" in Belarus. This cooperative effort between CIS law enforcement officials resulted in the seizure of more than 80 kilograms of narcotics in Belarus in October.

Accomplishments. While Belarus does not face production or cultivation problems, drug use and transit issues must be addressed before Belarus will be in full compliance with the 1988 UN Drug Convention. Government agencies have proposed a set of amendments on drug control to the Belarusian Criminal Code to be included in the national law drafting annual plan for 2006. If the amendments are accepted without change, the legislation will bring Belarus fully in line with the convention.

Law Enforcement Efforts. From January 1 to November 1, 2005, 2,735 people committed 4,707 drug-related crimes. Authorities seized 907 kilograms of drugs during that same time period, but experts, including government officials, agree that this quantity fails to reflect the real quantity of drugs transiting or used in Belarus. Official seizure figures do not reflect the reality of the problem, as it is assumed most drugs transit Belarus undetected. Neighboring countries reported an increase in drugs that came from or passed through Belarus. Enforcement efforts suffer from lack of communication and coordination among agencies. For example, State Security Services refused to allow law enforcement agencies to use a BUMAD-sponsored software program to enhance information sharing. It is the same program that other BUMAD recipients have already adopted and implemented. Belarusian border guards lack the training, and in many cases, the equipment to conduct effective searches. International assistance programs have tried to alleviate this problem, but insufficient supplies and training still plague law enforcement officials' work. Despite these resource problems, the majority of government officials take seriously their efforts to combat drug smuggling. By all accounts officials involved in combating drug trafficking cooperate well with their colleagues in neighboring countries. For example, the lack of a border control between Belarus and Russia creates an easy drug smuggling route. In recognition of this problem, police officials from both countries met in October to discuss ways to more effectively stop drug trafficking across the shared border.

The total amount of drug seizures has declined since last year. Drugs seized from January 1-November 1, 2005 (in kilograms) are as follows: Poppy Straw (608); Marijuana (167); Raw Opium (74.8); Heroin (26.7); Amphetamine/Methamphetamine (18.9); Acetylated Opium (liquid heroin) (6.0); Hashish (4.4); Cocaine (2.0); Hallucinogens (1.2); Methadone (1.1); Depressants (1.0); All Other Drugs (under one kilogram). Belarus continues to have problems with abuse of the extract from poppy straw, which is very popular in Ukraine, Russia, and Belarus. Poppy straw was again the drug seized in greatest quantity in 2005—608 kilograms. There is, however, no evidence of large-scale production of poppies for export. Heroin seizures have skyrocketed after three years of steady decline; this year police seized 26.7kgs. Despite their higher prices, synthetic drugs are growing in popularity due to their longer lasting effects. In 2005, authorities seized 1.1 kilograms of methadone, compared to 682 grams in 2004.

Corruption. Corruption is a problem among border and customs officials, which makes interdiction of narcotics difficult. An anticorruption bill was voted down twice last year was removed from the legislative agenda in 2005. The government did not accept any of the 60 proposals in the bill, which included prosecuting presidential candidates and public servants for corruption. In an effort to curb corruption, however, Belarus is in the process of ratifying the 1999 Council of Europe Civil Law Convention on Corruption. This bill would guarantee compensation to those who suffer damages as a result of corruption. Moreover, if a public official commits corruption, this legislation mandates that the government is liable for providing compensation.

Agreements and Treaties. Belarus is a party to the 1988 UN Drug Convention, the 1961 UN Single Convention as amended by the 1972 Protocol, and the 1971 UN Convention on Psychotropic Substances. Belarus is a party to the UN Convention Against Corruption, and the UN Convention against Transnational Organized Crime and its protocols against migrant smuggling, trafficking in persons and manufacturing and trafficking in illegal firearms.

The international donor community has had repeated difficulties in getting assistance programs registered by the government. In September, a presidential edict greatly restricted all foreign technical assistance, making it nearly impossible to introduce and utilize international aid in Belarus. There have also been attempts by the Belarusian government to tax foreign aid, despite international agreements. These problems have slowed the implementation of international assistance programs. For example, it took several months to register the second part of BUMAD, which resulted in an interruption in program activities and a delayed launch of the second phase.

Cultivation/Production. There is no confirmed drug cultivation or production in Belarus. Belarus, however, does possess the resources necessary to produce precursor chemicals. Neighboring countries allege that Belarus is a source of precursor chemicals, but Belarusian authorities deny this accusation.

Drug Flow/Transit. Most serious illicit drugs, especially heroin, enter Belarus from Russia. Drugs also enter Belarus from Ukraine (semi-refined opium); the Baltic states, the Netherlands, Poland (amphetamines); Afghanistan, Caucasian republics, Pakistan, Russia, Tajikistan, Turkmenistan, Ukraine (heroin); Caucasian republics, Ukraine (marijuana); Russia (methadone); Ukraine (poppy straw). Drugs transit Belarus to Poland, Russia (amphetamines); Russia, Western Europe (heroin); Lithuania, Russia (marijuana, poppy straw); Poland, Russia (precursors); Baltic states, Russia (Rohypnol).

The Government of Belarus does not have any significant programs aimed at combating trafficking. Belarusian border guards lack the training, and in many cases the equipment, to conduct effective searches. The BUMAD program is attempting to improve Belarus' border checkpoints and the training of law enforcement personnel. Resource shortages plague the government's efforts in this area.

Domestic Programs (Demand Reduction). Belarus still lacks an effective system of counternarcotics education, though such programs occur at the local level with varying degrees of success. Police officers who work with juvenile crime run drug prevention programs in schools, but lack sufficient training, resources, and nation-wide coordination of curriculum. The BUMAD program aims to formulate a national curriculum and provide training. This year, BUMAD and the GOB launched a counternarcotics information campaign—You and Me against Drugs—targeted at youth in Minsk and in the regions. The information campaign for this program included pamphlet distribution, lectures at organized sporting events and the creation of an informational counternarcotics video with famous Belarusian athletes. In addition, the BUMAD-sponsored NGO Mothers Against Drugs (MAD) won the 2005 UN Civil Society Award for its work on developing and implementing drug prevention programs among Belarusian youth, including counseling services, HIV awareness programs, and self-help groups for addicts and their family members.

According to official data, there are approximately 6,100 registered drug addicts in Belarus and 1,250 registered drug abusers. Belarusian experts, however, estimate the real number at 55,000. The many unregistered addicts fear consequences at work, school, and in society if their addiction becomes known. Drug use is heavily criminalized and highly stigmatized by government and in society. The exception is among youth, who have ready access to narcotics at dance clubs, university dormitories and educational facilities. Treatment of drug addicts is generally done in psychiatric hospitals, either as a result of court remand or self-enrollment, or in prisons. The emphasis of all programs is only detoxification and stabilization. NGOs run six rehabilitation centers, which attempt to provide long-term care, including psychological assistance and job training. Financial limitations constrain the breadth of these programs. BUMAD has successfully launched several "Your Choice" one-stop counseling centers in Belarus this year. These centers help injection drug users find medical care, information, and counseling at no cost.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. The USG has not provided narcotics/justice sector assistance to the GOB since February 1997.

The Road Ahead. The USG will continue to encourage Belarus authorities to enforce their counternarcotics laws.

MONEY LAUNDERING

Belarus is not a regional financial center. A general lack of transparency in industry and banking sectors makes it difficult to assess the level of or potential for money laundering and other financial crimes. Belarus faces problems with organized crime and therefore is vulnerable to money laundering. Due to inflation, excessively high taxes, and the dollarization of the economy, a significant volume of foreign-currency cash transactions eludes the banking system. Shadow incomes from offshore companies, filtered through small local businesses, constitute a significant portion of foreign investment. Casinos and gambling establishments are prevalent.

Economic decision-making in Belarus is highly concentrated within the top levels of government and has become even more so after the President issued Decree 520 "On Improving Legal Regulation of Certain Economic Relations" in November 2005. This decree gives the president broader powers over the entire economy—including the power to manage, dispose of, and privatize all state owned property—while taking away authority from Parliament, the National Bank of Belarus, and even market forces. The decree also states that any legislation that contradicts the decree will expire in June 2006. From that date, the president will be above the law when it comes to economic regulation. In addition, by the power of the "golden share rule," government agencies have broad powers to intervene in the management of public and private enterprises, which they often do.

Since the President issued decree 114 "On free economic zones on the territory of the Republic of Belarus" in 1996, Belarus has established six free economic zones (FEZs). The president creates FEZs upon the recommendation of the Council of Ministers and can dissolve or extend the existence of a FEZ at will. The Presidential Administration, the State Control Committee (SCC), and regional and Minsk city authorities supervise the activities of companies in the FEZs. According to the SCC, applying organizations are fully vetted before they are allowed to operate in an FEZ in an effort to prevent money laundering and terrorism finance.

Belarus' "Law on Measures to Prevent the Laundering of Illegally Acquired Proceeds" (AML Law) was amended in 2005. It establishes the legal and organization framework to prevent money laundering and terrorism financing. The measures described in the AML Law apply to all entities that conduct financial transactions in Belarus. Such entities include: bank and non-bank credit and financial institutions; stock and currency exchanges; investment funds and other professional dealers in securities; insurance and reinsurance institutions; dealers' and brokers' offices; notary offices (notaries); casinos and other gambling establishments; pawn shops; and other organizations conducting financial transactions.

The AML Law makes individuals and businesses, government entities, and entities without legal status criminally liable for drug and non-drug related money laundering, although the punishments for laundering money or financing terrorism are not explicitly stated in the law. However, Article 235 of the Belarusian criminal code ("Legalization of illegally acquired proceeds") stipulates that money laundering crimes may be punishable by fine or prison terms of up to ten years. The law defines "illegally acquired proceeds" as money (Belarusian or foreign currency), securities or other assets, including property rights and exclusive rights to intellectual property, obtained in violation of the law.

The AML Law authorizes the following government bodies to monitor financial transactions for the purpose of preventing money laundering: the State Control Committee (Department of Financial Monitoring); the Securities Committee; the Ministry of Finance; the Ministry of Justice; the Ministry of Communications and Information; the Ministry of Sports and Tourism; the Committee on Land Resources; and other state bodies.
In December 2005, Parliament approved a series of amendments to the AML Law to enhance the current legislation on money laundering prevention. The amendments state that individual and corporate financial transactions exceeding approximately $27,000 and $270,000, respectively, are subject to special inspection. The amendments, however, exempt most government transactions and transactions sanctioned by the President from extraordinary inspection.

In January 2005, the President signed a decree on the regulation of the gambling sector. The owners of gambling businesses will be subject to stricter tax regulations. Gamblers will have to produce a passport or other identification in order to receive a money prize, a provision intended to combat money laundering.
The Belarusian banking sector consists of 31 banks. Within this number, 27 have foreign investors and nine banks are foreign owned. The state-owned BelarusBank is the largest and most influential bank in Belarus. Four other state banks and one private bank comprise the majority of the remaining banking activities in the country. In addition, 12 foreign banks have representative offices in Belarus in order to facilitate business cooperation with their Belarusian clients.

In 2003, Belarus established the Department of Financial Monitoring (DFM)—the Belarusian equivalent of a Financial Intelligence Unit—within the State Control Committee and named the DFM as the primary government agency responsible for gathering, monitoring and disseminating financial intelligence. The DFM analyzes information it receives for evidence of money laundering to pass to law enforcement officials for prosecution. The DFM also has the power to penalize those who violate money laundering laws. The DFM cooperates with its counterparts in foreign states and with international organizations to combat money laundering. Belarus' DFM is not a member of the Egmont Group, but it has applied for membership. Russia has agreed to sponsor Belarus' membership and to represent Belarus while the DFM's membership application is pending.

Financial institutions are obligated to register with the DFM transactions subject to special monitoring, such as: transactions whose suspected purpose is money laundering or terrorism finance; cases where the person performing the transaction is a known terrorist or controlled by a known terrorist; cases in which the person performing the transaction is from a state that does not cooperate internationally to prevent money laundering and terrorism financing; and finally, transactions exceeding approximately $27,000 for individuals and $270,000 for businesses that involve cash, property, securities, loans or remittances. Belarusian law stipulates that a one-time transaction that exceeds predetermined amounts for individuals and businesses set by the government must be registered in accordance with the law. If the total value of transactions conducted in one month exceeds the set thresholds and there is reasonable evidence to suggest that the transactions are related, then all the transaction activity must be registered.

Financial institutions conducting transfers subject to special monitoring are required to submit information about such transfers in written form to the DFM within one business day of the reported transaction. Financial institutions should identify the individuals and businesses ordering the transaction or the person on whose behalf the transaction is being placed, disclose information about the beneficiary of a transaction, and provide the account information and document details used in the transaction, including the type of transaction, the name and location of the financial institution conducting the transfer, and the date, time and value of the transfer. The law provides a "safe harbor" for banks and other financial institutions that provide otherwise confidential transaction data to investigating authorities, provided the information is given in accordance with the procedures established by law. Under the State Control Committee (SCC), the Department of Financial Investigations, in conjunction with the Prosecutor General's Office, has the legal authority to investigate suspicious financial transactions.

Failure to register and transmit the required information on financial transactions may subject a bank or other financial institution to criminal liability. The National Bank of Belarus is the relevant monitoring agency for the majority of transactions conducted by banking and other financial institutions. According to the National Bank, information on suspicious transactions should be reported to the Bank's Department of Bank Monitoring. Although the banking code stipulates that the National Bank has primary regulatory authority over the banking sector, in practice, the Presidential Administration exerts significant influence on central and state commercial bank operations, including employment. Any member of the Board of the National Bank may be removed from office by the president with a simple notification to the National Assembly.

Terrorism is a crime in Belarus. The AML Law establishes measures to prevent terrorism finance. Belarus' law on counterterrorism also states that knowingly financing or otherwise assisting a terrorist group constitutes terrorist activity. Under the Belarusian Criminal Code, the willful provision or collection of funds in support of terrorism by nationals of Belarus or persons in its territory constitutes participation in the act of terrorism itself in the form of aiding and abetting. In December 2005, the Belarusian Parliament amended the Criminal Code to stiffen the penalty for the financing of terrorism and thus bring Belarusian regulations into compliance with the International Convention for the Suppression of the Financing of Terrorism. The amendments explicitly define terrorist activities and terrorism finance and carry an eight to twelve year prison sentence for those found guilty of sponsoring terrorism.

The seizure of funds or assets held in a bank requires a court decision, a decree issued by a body of inquiry or pre-trial investigation, or a decision by the tax authorities. A 2002 directive issued by the Board of Governors of the National Bank prohibits all transactions with accounts belonging to terrorists, terrorist organizations and associated persons. This directive also outlines a process for circulating to banks the names of suspected terrorists and terrorist organizations on the UNSCR 1267 Sanctions Committee's consolidated list. The National Bank is required to disseminate to banks the updates to the consolidated list and other information related to terrorist finance as it is received from the Ministry of Foreign Affairs. The directive gives banks the authority to freeze transactions in the accounts of terrorists, terrorist organizations and associated persons. Through 2005, Belarus has not identified any assets as belonging to individuals or entities included on the UNSCR 1267 Sanctions Committee's consolidated list.

Belarus has signed bilateral treaties on law enforcement cooperation with Bulgaria, Lithuania, the People's Republic of China, Poland, Romania, Turkey, the United Kingdom, and Vietnam. Belarus is also a party to five agreements on law enforcement cooperation and information sharing among CIS member states, including the Agreement on Cooperation among CIS Member States in the Fight against Crime and the Agreement on Cooperation among Ministries of Internal Affairs in the Fight against Terrorism. In 2004, Belarus joined the newly organized Eurasian Regional Group (EAG) Against Money Laundering and the Financing of Terrorism, a FATF-style regional body. The EAG has observer status in FATF.

Belarus has acceded to the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime. Belarus is a party to the 1988 UN Drug Convention and twelve of the thirteen conventions on counterterrorism. In 2004, Belarus signed the UN Convention against Corruption. On September 15, 2005, Belarus became a signatory to the UN International Convention for the Suppression of Acts of Nuclear Terrorism. Following that accession and in an effort to promote international cooperation in the fight against terrorism, the lower house of Parliament ratified a bill for the Civil Law Convention on Corruption in December 2005. The bill aims to protect those who suffer from acts of corruption and makes the state or appropriate authority liable to compensate individuals affected by a corrupt official, as well as invalidating all scandalous contract agreements.

The Government of Belarus has taken positive and concrete steps to construct an anti-money laundering and counterterrorist financing regime. Belarus should increase the transparency of its business and banking sectors. It should extend the application of its current anti-money laundering legislation to cover more of the governmental transactions that are currently exempted under the law. It should provide adequate resources to its FIU so that it can operate effectively and further improve the coordination between agencies responsible for enforcing anti-money laundering measures.