US embassy cable - 05ASUNCION423

UNCLAS SECTION 01 OF 02 ASUNCION 000423 
 
SIPDIS 
 
STATE FOR WHA/BSC, WHA/EPSC, S/CT, EB/ESC/TFS, INL/C/CP 
STATE PASS TO USTR FOR SCRONIN, LYANG 
USAID FOR AA/LAC ADOLFO FRANCO 
TREASURY FOR OSIA MAUREEN WAFER 
COMMERCE ITA SARAH COOK 
NSC FOR MIKE DEMPSEY 
SOUTHCOM FOR POLAD 
US SOUTHERN COMMAND MIAMI, FLORIDA 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, ETRD, KIPR, KMCA, KCRM, KTFN, PTER, PA 
SUBJECT: PARAGUAY: POST SUPPORTS ICE PROPOSAL FOR A TRADE 
TRANSPARENCY MODULE TO FIGHT MONEY LAUNDERING 
 
 
SENSITIVE BUT UNCLASSIFIED - ENTIRE TEXT. 
 
1.  (SBU) Summary and Action Request:  USG Immigration and 
Customs Enforcement agents have proposed the creation of a 
Trade Transparency Module (TTM) in Paraguay, identified as 
the second highest priority country after Colombia.  A TTM 
involves the use of sophisticated data mining software to 
analyze container-level trade data on both imports and 
exports between the US and partner countries.  The software 
can be used to identify global trends, improve risk 
management, identify specific cases of trade-based money 
laundering, and target corrupt officials.  Establishing a 
TTM in Paraguay, which would be incorporated in a vetted 
unit already in the process of being created, would cost 
approximately $200,000.  Post strongly supports this ICE 
initiative for the major impact it could have in combating 
money laundering, terrorism finance, and IPR violations, as 
well as its importance as a tool for fighting corruption and 
improving GOP revenue collection.  Post requests Department 
provide funding or seek interagency support for this 
project.  End Summary. 
 
2.  (SBU) In late February, three Special Agents from US 
Immigration and Customs Enforcement (ICE), a component of 
the Department of Homeland Security, visited Asuncion 
accompanied by ICE's attach based in Montevideo.  The 
purpose of the trip was to introduce post and the GOP, 
specifically the Customs Administration and the Attorney 
General, to ICE's Trade Transparency Program, a powerful new 
technological tool in the fight against money laundering, 
terrorism finance, and tax evasion. 
 
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TTM - A Powerful Tool 
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3.  (SBU) The ICE agents proposed the creation of a Trade 
Transparency Module (TTM) in Paraguay, which is the second 
priority country identified by ICE after Colombia, where the 
first TTM has been established.  A TTM consists of a vetted 
unit equipped with several computer workstations running 
special data mining software analyzing transaction level 
trade data to identify anomalies that can point to trade- 
based money laundering, tax evasion and official corruption. 
 
4.  (SBU) ICE already has access to a database, updated 
frequently to stay about two months behind the current date, 
that includes container level data on both US imports and 
exports.  Inputs come from the Automated Manifest System 
(AMS), Shippers Export Declarations (SED) and from Form 7501 
entry summaries.  The data includes the type and value of 
merchandize as well as name, address and other identifying 
information for the shipper and recipient.  The ICE team was 
able to determine that GOP customs data could be formatted 
to be compatible with the software. 
 
5.  (SBU) The software can review multiple databases, such 
as Cash and Monetary Instrument Reports (CMIRs), which 
record cross-border shipments of currency over $10,000, or 
other money transfer databases available in a particular 
country.  The software can crosscheck names, addresses, 
passport numbers, or other search criteria to identify money 
and merchandise movements by persons or entities of 
interest. 
 
6.  (SBU) The analysts of the TTM would be able to do broad, 
product-level analyses to identify risky products, countries 
of origin, or firms to better target inspection efforts. 
Shipment level crosschecks can identify under- or over- 
valuation by traders and allow for the identification of 
corrupt customs officials facilitating such deception.  In 
short, the TTM makes it very difficult for money launderers, 
tax evaders and corrupt officials to hide. 
 
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Vetted Unit a Must 
------------------ 
 
7.  (SBU) The capabilities of a TTM and the information it 
would generate would be valuable and subject to misuse by 
corrupt officials.  The TTM would have to be managed by a 
vetted unit within Customs to be effective in the long run. 
Post's Resident Enforcement Advisor from Treasury's Office 
of Technical Assistance had previously begun discussions 
with the Customs Director about the creation of such a unit 
(for general investigations, before the TTM had been 
proposed), and has enlisted the support of an intermittent 
OTA advisor.  A leader for the unit has been identified, and 
the Customs Director is in the process of recruiting members 
of the unit.  This unit would also staff the TTM, if one 
were created. 
 
8.   (SBU) According to the ICE proposal, establishing a TTM 
in Paraguay would cost approximately $200,000.  The costs 
include seven computers, each with a copy of the data mining 
software, the data, and travel expenses associated with 
installation and training.  A Customs Mutual Assistance 
Agreement between the US and Paraguay already exists, which 
would facilitate the exchange of data.  The US would receive 
the Paraguayan data as well, allowing ICE to undertake 
analyses in the US of suspicious movements between the US 
and Colombia, the US and Paraguay, and between Colombia and 
Paraguay. 
 
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Comment and Action Request - Worth the Price 
-------------------------------------------- 
 
9.  (SBU) Post believes that the creation of a TTM in 
Paraguay would advance several important mission goals, 
namely combating money laundering and terrorism financing, 
reducing official corruption, and supporting economic 
development through improved revenue collection.  The Hijazi 
case (ongoing money laundering and terrorism finance 
investigation) provides a snapshot of the volumes of money 
generated illicitly in the tri-border region, some of which 
goes directly to the Middle East.  Lax customs enforcement 
is the fertile soil from which much of Paraguay's informal 
and illicit economy grows.  Providing such a powerful tool 
to a government still focused on reform can make a big 
difference.  The timing is especially good given Brazil's 
renewed commitment to fight contraband and money laundering 
in the tri-border area.  Post strongly urges Washington 
agencies to identify funding to support a Trade Transparency 
Module in Paraguay. 
 
KEANE