BOSNIA ATTRACTIVE BASE FOR LAUNDERING, TERRORISM - STATE DEPARTMENT REPORT
BBC Monitoring International Reports - March 12, 2005

Text of report by S. Karic entitled "Smugglers annually embezzle 500 million dollars" published by the Bosnian Serb newspaper Nezavisne novine on 8 March

Washington D.C: The State Department's 2004 money laundering report says that Bosnia-Hercegovina is an important market and transit area for illegal items such as cigarettes, firearms, fuel and trafficking in humans as well.

The report states that the annual loss of revenues in Bosnia-Hercegovina, due to a growing black market, is estimated to be 500 million dollars. Recent studies conducted in Bosnia-Hercegovina show that between 40 and 60 per cent of B-H economic activities are carried out in the grey market.

"International observers believe that money laundering is widespread in Bosnia-Hercegovina, and is often done for political purposes through the existing financial institutions," reads the report.

The State Department warns that Bosnia-Hercegovina's State Agency for Investigation and Protection (SIPA) is still not fully operational, which is a limiting factor for the efforts to monitor suspicious financial transactions.

The report also says that the customs offices of the RS (Bosnian Serb Republic), the FB-H (B-H Federation), and the Brcko District are still separated and acting according to state customs laws, which has led to varying interpretations of the regulations.

"This has increased the possibility of smuggling in and out of Bosnia-Hercegovina, which actually represents an attractive logistical base for terrorists and their followers."

The State Department says that the current civilian legislation regulating money laundering is inadequate and insufficiently implemented in the economy, which is mainly cash-based and largely non-regulated.

The report also states that there is a significant incompleteness and overlapping of investigative and regulatory agencies, including the interior ministries, banking agencies and tax and customs administrations. According to the report, all of these institutions were subject to political interference and direct obstruction.

"Once SIPA and the Finance Department within SIPA become fully operational, these differences should be reduced, but the actual relations among the said bodies remain unclear."

The report also notes that 2004 saw the blocking of accounts of 1,234 fictitious companies and the blocking of property with a total value of 1.3 million KM (convertible marks).

The State Department says that several persons in Bosnia-Hercegovina have been charged with money laundering, but most of these cases were completed through out-of-court settlements.

Source: Nezavisne novine, Banja Luka, in Bosnian/Croatian/Serbian 8 Mar 05 p 2

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