KAZAKHSTAN: TERRORISM FINANCE: UPDATE NO. 2

UNCLAS ALMATY 001059

SIPDIS

STATE FOR EUR/CACEN (JMUDGE),EB/ESC/TFS (DAVID NELSON),S/CT
(TODD KUSHNER),IO/PSC (JOLEEN SCHWEITZER),EB/EPPD (CAROL
THOMPSON)

TREASURY FOR JUAN ZARATE

STATE PLEASE PASS OFAC FOR ROBERT WERNER

SENSITIVE

E.O. 12958: N/A
TAGS: PARM KTFN KZ ECONOMIC
SUBJECT: KAZAKHSTAN: TERRORISM FINANCE: UPDATE NO. 2

REF: A) State 32688 B) 2002 Patterns of Global Terrorism


1. (SBU) Post submits the following in response to Ref A
request, para. 10.


2. (SBU) A. Amount of assets frozen, forfeited, or seized (in
U.S. dollars) by host governments pursuant to UNSCR Resolutions
1267 and 1373, the legal authority under which the action was
taken (legislative, judicial, administrative, regulatory); and
what additional domestic actions have been taken against the
designated parties.

In October 2002, the National Bank issued orders to freeze the
assets belonging to an individual identified on the Executive
Order 13224 terrorist asset-freeze list who had held shares in
a local bank. (Ref B) The shares were valued at approximately
$63,000.


3. (SBU) B. What impediments exist for more robust cooperation
with your host government or co-sponsoring designations?

The main impediments to more robust cooperation with Kazakhstan
are the need for a more complete legislative framework and the
need for the GOK to improve its own interagency processes.


4. (SBU) C. Is your host government willing to accept USG
training and technical assistance, including an assessment of
training needs? In your view, what are your host government's
priority training and technical assistance needs with regard to
the development and/or enhancement of their anti-terrorist
financing regimes in general and their sanctions program in
particular?

The GOK regularly accepts USG training and technical
assistance. During meetings among Director Robert Mueller,
Federal Bureau of Investigation, Legat, and Chairman Dutbayev
of the Committee for National Security (KNB) in Washington, DC
in October 2003, the KNB requested FBI assistance/training in
Terrorism Financing matters. In April 2004, the FBI provided
INL-funded training to investigators from the KNB, the
Prosecutor General's Office, the Ministry of the Interior, and
the Financial Police. As a result of this training, it was
clear that Kazakhstani law enforcement authorities needed to
develop an understanding of how to use developing laws and a
means of coordinating with financial institutions.

INL did a training assessment in January 2004 which resulted in
the above-mentioned terrorist financing course and a series of
INL-funded money laundering courses. The latter have included
students from the KNB, the lead agency for anti-terrorism
financing. INL continues to work with the GOK on the passage
of an anti-money laundering law (expected this year) and has
been invited back to help with financial institution compliance
training and in the establishment of a financial intelligence
unit (FIU). The FIU will be a major tool in the tracking of all
kinds of money laundering.


5. (SBU) D. How would you rank your host country in terms of
risk that it will be used as a site either for significant fund
raising or for significant banking services for terrorists
("high," "medium," or "low")? "Significant" means raising or
banking tens of thousands of dollars. Please provide a brief
justification for your opinion, including references to intel
or other reporting, as appropriate.

Post assesses the risk of fund raising in Kazakhstan as low,
given the lack of sympathy among the vast majority of the
population for extremist views. The risk of banking services
is medium to high, given that Kazakhstan is rapidly becoming an
important financial services center for Central Asia. The GOK
estimates that more than $1 billion is year is laundered out of
Kazakhstan; while we presume that the majority is related to
tax evasion and organized crime, it is probable that some is
related to terrorist groups. The GOK did not, however, report
any money laundering by terrorist groups last year among the
497 money laundering cases it prosecuted. Cash smuggling into
Russia and Europe is also prevalent; a Federal Reserve group
here last year estimated the amount could be as high as several
hundred million dollars each year.

Ordway


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