TERRORIST FINANCE: VIEWS FROM THE WORKING LEVEL IN

C O N F I D E N T I A L MADRID 002902

SIPDIS

STATE FOR EB, S/CT, EUR/ERA AND EUR/WE
TREASURY FOR DAS ZARATE AND OFAC

E.O. 12958: DECL: 07/25/2014
TAGS: ETTC EFIN PTER KTFN SP
SUBJECT: TERRORIST FINANCE: VIEWS FROM THE WORKING LEVEL IN
SPAIN'S FIU

REF: MADRID 960

Classified By: acting Econ Counselor Richard C. Merrin for reasons 1.4
(b) and (d).


1. (C) Summary. SEPBLAC's (Spain's financial intelligence
unit) working level officer responsible for terrorist finance
issues, offered his views on legal and organizational issues
affecting the fight against terrorist finance in Spain. He
predicted that the regulations for Spain's 2003 Terrorist
Finance law would be completed by October. He criticized the
weak position SEPBLAC holds on the new Terrorist Finance
Oversight Committee, but noted that his unit is committed to
cooperation with other Spanish agencies and financial
authorities. Our contact also mentioned that SEPBLAC is
working on an improved bank communication system, that will
bring rural banks under oversight. End Summary.


2. (SBU) We met July 22 with the key working level SEPBLAC
officer responsibile for terrorist finance issues. In the
coming fiscal year, SEPBLAC will hire new officers to create
a permanent terrorist finance unit, which our contact hopes
to head. He just returned from a visit to FINCEN to gain
understanding about the U.S. financial intelligence unit's
(FIU's) role in combating terrorist financing. He mentioned
several issues and goals that would enhance his
organization's ability to investigate and combat terrorist
financing in Spain.


3. (C) Our contact offered a positive outlook on the process
of transcribing into regulation Spain's 2003 Law on the
Prevention and Blocking of Terrorist Financing. He noted
that the statutory Terrorist Finance Oversight Committee (The
Committee) met last week to begin the regulation writing
process. He hinted that a possible draft already exists and
the process might be completed as early as October. Once
fully enacted, Spain's regulators will have significantly
more preventive and administrative power to fight terrorist
financing.


4. (C) The SEPBLAC officer expressed concern with the way the
law is currently written, giving sole authority to launch an
investigation to the Secretary of State for Security in the
Ministry of Interior. In his view, SEPBLAC is the more
competent agency to police financial transactions because of
its bank regulating role. He noted that his superiors are
considering ways of upgrading SEPBLAC's authority on the
commission during the regulation drafting. This may not be
possible without a parliamentary change in the law.


5. (SBU) Increasing international and internal coordination
is another SEPBLAC priority. Our contact noted that his
agency is seeking greater information sharing with the
Spanish Intelligence Agency, the Spanish National Police, the
Guardia Civil, and the Ministry of Economy's Directorate
General of the Treasury. He also mentioned that the current
director of SEPBLAC is dedicated to improving outreach to
FIUs in other countries.


6. (C) Our contact brought to light a weakness in SEPBLAC's
ability to communicate asset search and freeze instructions
to the entire Spanish banking system. Currently, SEPBLAC's
directives only reach Spain's largest banks, covering 80-90%
of bank activity. Small rural banks are not currently part
of SEPBLAC's notification and information request system. To
remedy this situation, the section our contact heads is
developing a computer system upgrade to send communications
to all banks in Spain. He predicted this system will be
active in October.


7. (C) Comment. Our contact confirmed that at the working
level, SEPBLAC is an organization committed to rooting out
terrorist financing in Spain. As an FIU, SEPBLAC is the main
entity that carrying out Spain's efforts to locate and freeze
terrorist funds. His comments on the position of the
Ministry of Interior's lead role on the Committee agree with
our earlier concerns (reftel) on the Ministry of Interior's
hesitance to carry out a preventive fight against terrorist
financing. In another recent conversation, an MFA contact
pointed out that preventive and administrative approaches to
stopping terrorist financing are counter to the Spanish
mind-set. Perhaps if SEPBLAC were given a stronger role, the
fight against terrorist financing would be more aggressive.
It will be interesting to see the outcome of the regulations,
should our contact be correct in his predicted October
completion date.
MANZANARES