JOINT EXAMINATION OF AL RAJHI BANK THROUGH THE

S E C R E T STATE 251768

E.O. 12958: DNG: CO 11/23/15
TAGS: EFIN PTER PREL KTFN SA
SUBJECT: JOINT EXAMINATION OF AL RAJHI BANK THROUGH THE
JOINT TERRORIST FINANCING TASK FORCE

REF: RIYADH 1503

(U) Classified by NEA David Satterfield for reasons 1.4
(b) and (d).


1. (S) Summary and action request. This is an urgent
action cable. Please pass the proposed terms of reference
for the joint examination of the Al Rajhi Bank through the
Joint Terrorist Financing Task Force to appropriate Saudi
officials at the Saudi Arabian Monetary Agency, the
Ministry of Finance, the Ministry of Interior, and the
Joint Terrorist Finance Task Force. This same paper will
be hand delivered in Washington to Adel al-Jubeir, the
Foreign Affairs Advisor to Crown Prince Abdullah. End
summary.


2. (S - Releasable to KSA)

BEGIN TEXT

Introduction

The cooperation between the U.S. and Saudi governments
through the Joint Terrorist Financing Task Force (JTFTF),
along with the assessment by the Financial Action Task
Force (FATF) of the Saudi anti-money laundering and
countering financing of terrorism (AML/CFT) regime,
signals significant capabilities by the Saudi government
to ensure that its financial institutions are not being
used by extremists intent on supporting/committing acts of
terrorism. While the Saudi government has provided
assurances regarding measures it is putting in place to
address terrorism, there remains a need for greater
coordination with the Saudi Arabian Monetary Agency (SAMA)
and use of AML/CFT authorities within the financial
sector. For example, representatives of the U.S. and
Kingdom of Saudi Arabia have discussed U.S. concerns that
Al Rajhi Banking and Investment Corporation (Al Rajhi
Bank) has been used by al Qaida and like-minded terrorist
groups. The U.S. government has provided the Saudi
government with information documenting specific instances
of terrorists using Al Rajhi Bank, including information
about specific accounts and transactions of interest. The
U.S. and Saudi governments have agreed to work together to
meet a mutual goal of ensuring that Al Rajhi Bank is doing
everything possible to keep the taint of terrorists and
their supporters out of the bank. This includes ensuring
that the Al Rajhi Bank is fully equipped to monitor and
note suspicious patterns and trends in account activity,
so as to create a preventative system within the
institution.

Proposed Terms of Reference

The U.S. Department of the Treasury (Treasury),together
with an inter-agency bank examination team (examination
team),will work with SAMA through the existing JTFTF, on
terms of reference for conducting a joint examination of
certain accounts at Al Rajhi Bank. The joint examination
will include a review of both customer information
relevant to the specified accounts and transactions (wire
transfer, check payment, cash management, etc.) processed
through those accounts. Additionally, the examination team
will review anti-money laundering compliance files related
to all of the accounts. This joint examination can be
modeled on other such examinations conducted with foreign
authorities when there have been perceived issues of
mutual concern regarding the activities within a
particular financial institution.

The intent of such an on-site review and related
examination is to work collectively with the Al Rajhi
Bank, identifying patterns and problems, to ensure that
all corrective measures are delineated and implemented to
ensure the institution is not operating in a way that
provides a safe haven for the financial transactions of
terrorists and their supporters. The information reviewed
and developed in the course of this joint examination
would be used to help the bank formulate solutions, guide
SAMA in its regulatory work, and provide the JTFTF with
potential leads for further investigation.

There is agreement to ensure that as much work as possible
is completed before the examination team arrives in Saudi
Arabia. This work in preparation for the joint examination
would involve an off-site review of certain Al Rajhi Bank
records. A list of the types of documents that will be
requested is attached as Exhibit A. Upon receipt of the
requested documents, the examination team will review them
before beginning the examination. It is likely that this
review of the requested documents will take several weeks,
including the time necessary to translate all documents
that are not maintained in English.

After the examination team has reviewed the requested
records, Treasury will work with SAMA through the JTFTF to
establish a schedule for the on-site examination in Saudi
Arabia. The on-site visit will include the opportunity to
speak with Al Rajhi Bank personnel, including, but not
limited to, the account relationship managers for the
specified accounts. These meetings will enable the
examination team to better understand the nature of these
accounts, the transactions processed through them, and the
account holders' backgrounds and banking activities. Once
on-site, the examination team also will be able to request
any additional documents, not already provided, relating
to the specified accounts or to any relevant transactions.
The small examination team would likely be comprised of
approximately seven people, including representatives from
the regulatory and law enforcement communities, and would
be prepared to provide translators to facilitate the
meetings as well as the additional document review. It is
possible that the examination team will divide into subgroups,
conducting simultaneous examinations on discrete
issues, e.g., reviews of account information or systemic
issues, in order to ensure greater efficiency and
appropriate use of expertise. It is anticipated that the
examination would take one to two weeks, but there is a
need to be flexible in order to accommodate the amount of
information and processes to be reviewed. It is
understood that SAMA representatives will fully
participate in all meetings with Al Rajhi Bank personnel
and the review of all documents.


3. (C) Exhibit A to Proposed Terms of Reference for Joint
Examination of Al Rajhi Bank
Documents to be provided to Juan C. Zarate, Assistant
Secretary for Terrorist Financing and Financial Crimes,
Department of the Treasury for review by the examination
team in advance of on-site visit:


A. A listing of all accounts of any kind, including DDA
accounts, maintained by your institution for the
individuals that will be specified.


B. For each account listed, all documentation concerning
the customer in the possession of the institution,
including the complete account opening documentation,
customer background information, client type (e.g.
bank customer, commercial),country of residence, and
risk rating.


C. For each account listed, all account statements and a
complete transcript of wire transfer data for the
specified period. The following field headings are
suggested for the wire transfer data:

-- Source
-- Transaction # Date
-- Debit Amount Credit Amount
-- Debit Party
-- Debit Account #
-- Debit Party Address
-- Credit Party
-- Credit Party Account #
-- Credit Party Address
-- Ordering Bank
-- Ordering Bank Address
-- Ordering Customer
-- Ordering Customer Address
-- Beneficiary
-- Beneficiary Address
-- Account With Address
-- Payment Detail Bank to Bank


D. For each account listed, any reports, including any
work papers and supporting documentation of anti-
money laundering compliance or terrorist financing
reviews related to the account.


E. Action plans, if any, related to any reports
concerning anti-money laundering compliance or
terrorist financing described in paragraph 4.


F. A list of all local laws relating to customers with
which Al Rajhi Bank must comply, including a
description of how businesses ensure compliance with
such laws, and how Al Rajhi Bank verifies compliance
by business areas.


G. Any external audit reports, including any work papers
and supporting documentation, rendered during the
preceding three years, including audits of Compliance
and AML/KYC.

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