2002: International Narcotics Control Strategy Report: Money Laundering and Financial Crimes – Georgia Review
Georgia has a small economy and is not a regional financial center. The scope of money laundering in Georgia involves small-scale schemes with proceeds from various illegal activities. Contraband, which is a large part of the “shadow economy” in Georgia, generates substantial revenues. Estimates of the “shadow economy” are in the range of 60 percent of GDP. Reportedly, some commercial banks have become involved in laundering funds generated by the smuggling of alcohol and cigarettes, but these proceeds are generally held in dollars outside the banking system. Most financial transactions in Georgia are conducted in cash. Only between three to five percent of the population currently maintain a personal bank account, as following independence there was a mushrooming of banking institutions, the majority of which collapsed, causing bank customers serious losses. Corruption also remains an issue in Georgia. Overall, Georgia is very vulnerable to money laundering, as there are serious deficiencies in the anti-money laundering system in all areas—legal, financial and law enforcement.
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Georgia remains a secondary transit route for narcotics flowing from Afghanistan, transiting Central Asia to Europe. The potential for Georgia to become an important narcotics transit route in the future is heightened by the lack of control the government exercises over some of its borders and territory. Despite recent efforts at reform and personnel changes, law enforcement agencies remain overstaffed, under-equipped, poorly paid, and have a reputation for corruption. In response to Government of Georgia (GOG) requests, the United States Government (USG) continues to provide training and equipment for the border guards and customs officials. Georgia is a party to the 1988 UN Drug Convention and is also receiving assistance from the UN Office of Drug Control and Crime Prevention(UNODC).
Georgia is a source and transit country for women trafficked primarily to Turkey and Greece for purposes of sexual exploitation and domestic servitude.
The Government of Georgia does not yet fully comply with minimum standards for the elimination of trafficking; however, it is making significant efforts to do so. The government has expressed the willingness to combat trafficking but has limited resources to fund projects. Trafficking in minors is prohibited by the Georgian criminal code. An anti-trafficking law is being drafted. Existing provisions on slavery and forced labor, illegal imprisonment, sexual coercion and fraud could be used against traffickers. One prominent case involving trafficking of minors resulted in a recent conviction. Government officials are suspected of involvement in the production of fraudulent travel documents and in complicity with travel agencies as fronts for trafficking. There is no specialized training for law enforcement by the government but some officials were sent by the U.S. Embassy to an international anti-trafficking course. There are new border monitoring systems and training for border guards is provided by international organizations. There are only a few victim protection services and these are provided by NGOs. One measure of prevention efforts was the formation of the Strategy Department in May 2001 to address victim rights. This office is taking the lead on trafficking but does not have financial resources to fund information campaigns. The government distributes information materials developed by NGOs and international organizations. In February 2000, the President established a general strategy against trafficking.