US embassy cable - 05VILNIUS478

UNCLAS VILNIUS 000478 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR INL AND EUR/NB 
JUSTICE FOR OIA AND AFMLS 
TREASURY FOR FINCEN 
 
E.O. 12958: N/A 
TAGS: SNAR, EFIN, KCRM, PTER, KTFN, LH, HT13 
SUBJECT: LITHUANIA REJECTS UKRAINIAN MONEY LAUNDERING 
ALLEGATIONS 
 
REF: VILNIUS 28 
 
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SUMMARY 
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1. The GOL dismissed recent allegations by Ukranian Minister 
of Interior Yuri Lutsenko that Lithuanian banks laundered USD 
130 million to support the losing presidential campaign of 
Viktor Yanukovich.  The Ukrainian Embassy confirmed that 
there is no evidence to support the charges.  Lithuanian 
banking officials rejected the possibility that such a large 
quantity of cash could have slipped through the system's 
money laundering controls undetected.  Lithuanian law 
enforcement agencies have dropped the investigation.  End 
Summary. 
 
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No Evidence of Dirty Money 
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2. A flurry of diplomatic and media attention followed 
publication of Ukrainian MinInt Lutsenko's April 13 statement 
that the election committee of former PM Viktor Yanukovich 
had laundered USD 130 million through "certain Lithuanian 
banks" during the 2004 Ukrainian presidential election 
campaign, but no trail linking Lithuanian banks to dirty 
campaign money has emerged.  Mindaugas Kacerauskas, head of 
the Lithuanian MFA's Belarus, Moldova, and Ukraine Division, 
told us April 25 that he had assurances from the chairman of 
the board of the central bank that no cash transactions of 
that magnitude had passed through Lithuania's banking system. 
 Oleksii Selin, Political Officer at the Ukrainian Embassy, 
confirmed that the Ukrainian government has no evidence that 
Yanukovich's campaign laundered money through Lithuanian 
banks.  He said the Interior Minister made his remarks in an 
unofficial internet chat exchange, adding that the 
allegations do not reflect an official position.  Selin noted 
that there have been transfers of large sums between branches 
of Vilniaus Bankas in Lithuania and Ukraine, transfers he 
characterized as legitimate. 
 
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No Investigation 
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3.  Igoris Krzeskovskis, Head of FCIS's International 
Cooperation Department, told us that FCIS never received any 
formal or informal request from Ukraine to investigate money 
laundering charges.  In a statement to the press April 15, he 
said that FCIS would not conduct a pre-trial investigation 
due to a lack of supporting evidence.  The State Security 
Department reported April 20 that seven Lithuanian citizens 
might have been the victims of document theft and forgery, 
but it found no evidence that these individuals laundered 
money. 
 
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Tight Money Laundering Controls 
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4. The President of the Association of Lithuanian Banks 
called the Lithuanian banking sector "secure and 
transparent," and said that the money laundering charges are 
"baseless."  The Law on the Prevention of Money Laundering 
(reftel) requires banks to report to the Financial Crimes 
Investigation Service (FCIS) any transaction exceeding 50,000 
LTL (approx. USD 19,000).   Chief counsel to the Bank of 
Lithuania, Liutaruas Zygas, told us that the Bank would 
revoke the license of any bank engaging in money laundering. 
 
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Comment 
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5. Lithuania's strict money laundering law, tight controls 
implementing the law, and solid record of law enforcement -- 
and the Ukrainian Embassy's recognition that there isn't any 
smoke in this story, much less fire -- lead us to believe 
that the allegations of illegal transactions are groundless. 
 
Mull