(C/NF) TERRORIST FINANCE: USG BRAINSTORMING

C O N F I D E N T I A L SECTION 01 OF 03 THE HAGUE 000553

SIPDIS

NOFORN

STATE FOR EB/ESC/TFS, S/CT, EUR/ERA, INR/EC, EUR/UBI
TREASURY FOR EXECUTIVE OFFICE FOR TERRORIST FINANCING
(ZARATE)
JUSTICE FOR HAYDEN AND SZUBIN
FBI FOR TERRORIST FINANCING TASK FORCE
NSC FOR GPETERS
BRUSSELS ALSO FOR LEGATT
PARIS ALSO FOR USOECD

E.O. 12958: DECL: 03/01/2014
TAGS: ETTC PTER NL EUN
SUBJECT: (C/NF) TERRORIST FINANCE: USG BRAINSTORMING
SESSION WITH EUROPEAN "LIKEMINDED" COUNTRIES REACHES COMMON
UNDERSTANDING

REF: 03 THE HAGUE 3117

Classified By: Economic Counselor Richard Huff. Reason 1.5(d)


1. (C) Copenhagen, London, and Madrid are exempt from noforn
marking to allow discussion with appropriate contacts.


2. (C/NF) Summary: A U.S.-EU declaration on terrorist
financing (TF) would reinforce EU political commitment to
fighting TF and provide political support for making European
TF designation and implementation mechanisms more effective,
according to Dutch, Danish, Spanish, and UK officials
attending a 2/28 "likeminded" meeting in Paris. They
expressed a strong desire to improve EU TF procedures, noting
that the EU Clearinghouse does not enable the EU to take
swift action to prevent TF. They also said EU designations
needed greater follow-up, including through law enforcement
action. U.S. officials agreed that the U.S. and Europe
needed to work together to make designation, implementation,
and follow up actions more complementary and pointed out that
the effectiveness of both U.S. and European actions against
terrorist assets would be soon subject to public FATF
assessment. The Dutch expressed interest in hosting a
seminar during their EU Presidency that would feature
speakers capable of making a strong legal case for taking
swift, administrative and preventive action against sources
of TF. End Summary.


3. (C/NF) The Netherlands on February 28 hosted a meeting of
"likeminded" countries on the margins of the Financial Action
Task Force (FATF) Paris plenary to discuss how the U.S. and
EU designation processes might be more effective and
complementary in cutting off the flow of funding to terrorist
organizations. In addition to the Netherlands, participating
countries included the United States, Denmark, UK and Spain.
All participants declared that a heightened level of
attention to making meaningful designations and taking robust
law enforcement action against terrorist financiers is
necessary to deter and prevent terrorist attacks and is
mandated by UNSCR 1373. EU Members present at the meeting
cautioned that opening up the EU regulation on
(non-Taliban/Al Qaida-related) asset freezing should be
avoided if at all possible as EU opponents of the mechanism
could seize this as an opportunity to gut the regulation of
substance or raise evidentiary standards to such a level that
most designation attempts would be effectively impossible.


4. (C/NF) The Netherlands, Spain, Denmark, and UK thought a
U.S.-EU declaration promulgated at the U.S.-EU Summit or
other appropriate event (such as the third anniversary of
UNSCR 1373) would be extremely valuable in reaffirming the
joint political commitment to attacking terrorist financing
as a key element of the War on Terrorism and in reinforcing
the efforts of those EU countries that would like to tackle
terrorist financing more effectively. The Dutch could then
use such a declaration as a launching pad for implementing
improvements in EU TF practices. Some elements of a U.S.-EU
declaration could be an agreement that the U.S. and EU
consider without delay each others' designations and set up
an official channel of communications between each others'
designation systems; establish national designation systems;
effectively implement FATF special recommendation III
requirements and articulated best practices; prevent
designees from evading sanction simply by changing their
names; and setup a bilateral U.S.-EU reporting and feedback
mechanism to share information on assets frozen and follow up
action. The US del also pressed for the adoption of "safe
harbor" provisions in all EU countries so as to protect
governments and private sector officials from personal
liability for actions taken in the course of their work.
There was discussion as to whether a declaration should call
on each side to explain precisely and in writing reasons for
not supporting designations made by the other. Such a
formulation could be useful in influencing reluctant EU
member states to more openly identify their core objections
to a designation. However, there was also concern by some
that this sort of process would slow consideration of
designations and that enhanced bilateral contacts might be
more effective.


5. (C/NF) European officials thought that there is scope for
improving the EU designation process while still working
within existing European Union structures -- for example
through more focused "clearinghouse" agendas and better
informed discussions/participants, eliminating the ability
for an EU member state to levy "political" reservations, and
by more aggressively pushing recalcitrant EU members to
clearly specify and justify their objections to specific
designation proposals. They also requested that the USG, in
presenting its designation requests to the European Union,
better articulate its statements of the case to more fully
meet the criteria set out in the EU common
position/regulation. Some suspected that sufficient
information for the EU to support many designations could be
found in open or non-sensitive sources, thus, lightening the
burden on the U.S. declassification process. The UK and
Denmark, in particular, noted that many EU member states use
"lack of information" as a cover for "lack
of political will."


6. (C/NF) Participants also noted that the actions of
authorities involved in asset freezing and law enforcement
must be complementary if maximum results are to be achieved.
In the area of follow-up, the U.S. noted that designations
of terrorist groups are followed up by U.S. efforts to
identify sources of funding for these groups and prosecute
them; while EU representatives acknowledged that, instead of
being a first step, EU designation of terrorist organizations
tended to be a final step. Participants expressed the hope
that designating an entity and freezing its assets would
generate information that would be useful for pursuing a
criminal case that might lead to arrests and asset
forfeiture. The Netherlands thought some European legal
systems would not easily tolerate assets being frozen for
extended periods of time without law enforcement follow up
and suggested holding a seminar during their EU Presidency
that would feature speakers capable of making a strong legal
case for taking swift, administrative and preventive action
against sources of TF. Other EU participants stressed the
need for more coordination and coherence between the several
mechanisms in the EU -- from RELEX and the "clearinghouse"
to bodies preparing and considering legislation on anti-money
laundering and currency declarations to third pillar law
enforcement coordination mechanisms -- that address different
aspects of terrorist financing. A coordination mechanism
modeled on a FATF typologies exercise was suggested as
possible way forward. There was a brief discussion of the
internal EU proposal to create a counterterrorism coordinator
reporting to Solana, however, the UK and Denmark said they
have serious reservations with this idea.


7. (C/NF) USDEL pointed out that all EU members as well as
the European Commission are members of FATF and beginning in
would by the end of 2005 would be assessed by the FATF (as
will all FATF members) on their implementation of FATF
special recommendations on the combating of terrorist
financing and that the likelihood is that many EU members --
especially those lacking national authority to freeze
terrorist-related assets without delay and on a reasonable
basis -- will come up short. EU countries attending the
brainstorming session tended to express a preference for EU
as opposed to national action but also noted that having
national regimes in place will be necessary not only to meet
FATF requirements but to ensure effective mechanisms are in
place should the current EU asset freeze regime fail to
overcome the several court challenges levied against it.


8. (C/NF) Participants concluded the meeting by noting that
it had been extremely useful in defining important issues and
developing actionable suggestions. They pledged to keep in
touch in the coming months and to look for opportunities to
meet again (perhaps next on the margins of the next FATF
terrorist finance committee meeting). EU representatives
agreed that including specific deliverables on terrorist
financing in the upcoming US-EU Summit Declaration would
significantly help the Netherlands in its effort to use its
upcoming EU Presidency to improve EU TF efforts. All thought
it would be important for any ideas ripe for advancement
(such as the idea of a U.S.-EU declaration) be carefully
introduced into EU processes and the U.S.-EU dialogue; the
next step for these ideas should be to engage the Irish
presidency. Participants noted that some of the actions
discussed, namely those dealing with enhancing the quality of
deliberations in the Clearinghouse and instituting effective
follow-up, can only be undertaken by EU countries themselves,
but agreed that it would be important for the U.S. to keep in
close touch with EU "likeminded" to determine when U.S.
influence would be complementary and when it would be
counterproductive.


9. (C/NF) Participants in this "likeminded" meeting:

Netherlands: Mr. Stefan van Wersch, RELEX Counselor
Ms. Margreet Wenting, Ministry of Finance
Mr. Leon Timmers, National Intelligence and
Security Agency (AIVD)
Mr. Wouter Jurgens, Political Affairs
Department, Ministry of Foreign Affairs
Mr. Alle Dorhout, European Integration
Department, Ministry of Foreign Affairs
Mr. Jacco Bos, Duth Embassy Paris

Denmark: Ms. Anne Ehrenreich, Ministry of Foreign Affairs
Mr. Jorgen Gammelgaard, RELEX Counselor


Spain: Mrs. M. Jesus Alonso Giminez, Ministry of
Foreign Affairs
Mr Pedro Jiminez Nacher, RELEX Counselor

UK: Mr. Robert Tinline, FCO

USG: Ms. Nicole Rothstein, EB/ESC/TFS
Mr. Gary Novis, S/CT
Ms. Suzanne Hayden, DOJ
Mr. Charles Ott, Treasury
Mr. Clement Gagne, USEU
Mr. Todd Kushner, US Embassy The Hague



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