TREASURY ACTING A/S GLASER DISCUSSES TERRORIST

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 008170

SIPDIS

E.O. 12958: DECL: 10/02/2020
TAGS: KTFN EFIN JO
SUBJECT: TREASURY ACTING A/S GLASER DISCUSSES TERRORIST
FINANCING WITH JORDANIAN OFFICIALS

REF: AMMAN 7547

Classified By: Charge d'affaires David Hale for reasons 1.4 (b),(d),a
nd (e).


1. (C) SUMMARY: Treasury Acting A/S
Daniel Glaser met with Finance Ministry and Central Bank of
Jordan officials to discuss terrorism finance issues,
including the status of the Anti-Money Laundering (AML) law
and Arab Bank's follow-up to U.S. regulatory actions against
it. He also explored Jordan's handling of charities,
informal remittance providers, and the regulatory environment
for cash couriers. Glaser found that improvements can be
made in each of these areas, even prior to passage of the AML
law. Glaser toured the Central Bank's provisional Financial
Intelligence Unit (FIU),and reviewed post's support in
helping Jordan bring its FIU up to international standards.
Glaser also met with two local banks to review their
"know-your-client" procedures and use of name-checks,
including the list maintained by the Office of Foreign Assets
Controls. END SUMMARY.

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THE CENTRAL BANK OF JORDAN
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2. (C) Treasury Acting A/S for Terrorism Financing and
Financial Crimes Glaser visited Jordan September 28-29,
accompanied by Policy Advisor Lebenson. In his meeting with
Central Bank of Jordan (CBJ) Deputy Governor Mohammad Shahin,
Glaser emphasized the importance of a reporting system
(either disclosure or declaration) for cash flows handled by
couriers both in-bound and out-bound, noting that such a
recommendation had been adopted at the MENA/FATF meeting held
earlier in the week in Beirut. (Currently, Jordan only has
an in-bound reporting requirement). Glaser refuted the claim
that a reporting system could be interpreted as a capital
control; such a system would not in fact constitute a capital
control, but would bring transparency to Jordan,s
cross-border cash flow by documenting amounts above a certain
threshold.


3. (C) Shahin reiterated that as long as cash transfers
follow proper procedures, there are no controls. He noted
that the region is comprised largely of cash-based economies,
and said that using cash was a common practice for travelers
in the region, particularly those coming from Iraq. Glaser
told Shahin that Treasury is working with the Iraqi
government on improving check-clearing and electronic banking
systems in Iraq, a move that could help reduce reliance on
cash.


4. (C) On the draft Anti-Money Laundering law, Shahin
reported that it was being considered in Parliament and that
the CBJ has been urging passage. Jordan already completed
an IMF Financial Sector Assessment Program (FSAP) in 2004,
and that program had an AML component. Shahin added that
Jordan's FIU would need a statutory basis if Jordan were to
be accepted as a member of the Egmont Group, the
international body promoting cooperation among between FIUs.


5. (C) On Arab Bank (AB) - whose New York branch was fined
in August for not implementing anti-money
laundering/counter-terrorist financing (AML/CFT) procedures
through its wire transfer facility - Glaser noted that AB,s
recent press release in response to the fine seemed out of
step with the bank's private comments. Glaser said he had
understood that AB was committed to implementing an AML/CFT
"gold standard" in its banking operations. Shahin responded
that AB feels it is being targeted because of its work in the
Palestinian Territories, though he personally did not agree
with that assertion. As AB's regulator, the CBJ also wants
the bank to implement proper procedures, and continues to
impress that upon AB. Despite the press release, the CBJ is
confident that AB will have all necessary procedures in place
in October. Shahin also said AB is committed to a global
compliance program to ensure its procedures were up to world
standards.


6. (C) Glaser noted that Jordanian banks have helped the
banking system in the Palestinian territories function, and
that the Palestinian Monetary Authority (PMA) had been
working with the CBJ. Shahin said the CBJ needs to sign an
MOU with the PMA before the CBJ can help in regulating
Jordanian bank branches in the Palestinian territories, and
that it cannot physically do so due to the
security situation there. Glaser said it was important that
bank branches in Gaza and the West Bank be effectively
supervised for AML/CFT, and urged the CBJ to work closely
with the PMA. Shahin agreed, adding that the CBJ hopes to
establish MOUs with every country in which Jordanian bank
branches are located, adding that Syrian banking officials
had come to Jordan to learn Jordan's systems.


7. (C) Glaser asked if Shahin was aware of Jordanian banks
encountering difficulty in their U.S. correspondent banking
relationships; Shahin answered that he was not.


8. (C) Finally, Glaser mentioned that Jordan's assumption of
the MENA/FATF vice-presidency was imminent, and that it was
an opportunity for Jordan to show real leadership in the
region. (NOTE: Post subsequently learned that CBJ Deputy
Governor Faris Sharaf will represent Jordan in that position.
END NOTE.)

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THE FINANCE MINISTRY
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9. (C) In his meeting with Finance Secretary General Hamad
Khasasbeh, Glaser asked about the prevalence in Jordan of
alternate remittance systems such as hawalas. Khasasbeh
noted that it was hard to calculate their impact on the
economy. Glaser said Treasury faced the same problem in the
U.S., but added that the USG requires money service providers
to register. Khasasbeh said there was no such requirement in
Jordan, and opined that the "errors and omissions" figure in
Jordan's balance of payments calculation should include
informal remittances. Glaser emphasized that Treasury was
not advocating the elimination of alternate remittance
systems - only highlighting the fact that such systems were
not transparent and thus subject to abuse.

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PROVISIONAL FIU
--------------


10. (C) Glaser toured Jordan's provisional FIU which though
functioning, has not yet been mandated by an AML law. Two of
the officers in the FIU - who had just returned from a
USAID-sponsored study tour to visit the Financial Crimes
Enforcement Network (FINCEN) outside Washington - told Glaser
the CBJ is working with Embassy Amman's USAID mission to buy
FINCEN software for use in Jordan's FIU. Meanwhile, the CBJ
is working with the World Bank in drafting the FIU
regulations.


11. (SBU) NOTE: In a later meeting with USAID, Post agreed
with Glaser to explore sending CBJ officials to Beirut to
examine the FIU there. In addition, AID is already working
with the CBJ on automation of its forms, including Suspicious
Activity Reports, the key document for tracking money
laundering and terrorist financing flows. AID is also
helping carry out a security assessment of the network
linking the CBJ with Jordanian banks, and upgrading it as
needed. Glaser agreed to talk to the head of Lebanon's FIU
on how it could help the CBJ with developing a comprehensive
scope of work. Glaser added that Lebanon had agreed to
sponsor Jordan's membership in the Egmont group, and
considered Lebanese-Jordanian cooperation in this area is a
logical step. Glaser also received interest from the
Egyptian FIU during his subsequent stop in Cairo in providing
Jordan technical advice. END NOTE.)


12. (SBU) CBJ officials sketched out for Glaser the
terrorist finance freezing mechanism in Jordan as follows:
The CBJ receives the list of UN designated terrorists from
the Ministry of Foreign Affairs via the U.S. Embassy, after
which it issues an order to the banks to freeze any accounts
under those names. They reported that Jordan has frozen no
assets pursuant to UN 1267 to date.

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CHARITIES
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13. (C) In Acting A/S Glaser's meeting with Minister of
Social Development Abdullah Oweidat (whose ministry regulates
charities),the Minister said that charities in Jordan must
submit their budgets annually, inform the ministry of the
areas in which they intend to work, and submit quarterly
activity reports to the ministry. Oweidat asserted that the
Ministry set the priorities for the work of charities in the
country. Oweidat added that he is establishing a unit under
his office to oversee charities, and emphasized the GoJ's
commitment to combating terrorism.


14. (C) Oweidat reported there are 1,000 Jordanian
charities, but that all of them work solely in Jordan and
have no international operations. Oweidat's deputy said all
fund-raising campaigns by charities in Jordan must be
approved by the Ministry, in consultation with the Ministry
of Interior and the security services. All money raised by a
charity must be spent within Jordan. Each governorate has a
Ministry representative to supervise the charities there.
The only exception to the rule of domestic-only charity work
was the official Jordan Hashemite Charity Organization, the
King's charity which directed funds and other assistance to
other countries affected by disasters. Such funds were
strictly controlled by the government.

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PRIVATE BANKS
--------------


15. (C) Directors of two local banks (the Export and Finance
Bank, and Union Bank) told Glaser they had either a
compliance department or an officer with AML
responsibilities, as well as training programs on AML.
Glaser stressed the importance of carefully following
"know-your-client" guidelines, as well as using the list of
names maintained by the Office of Foreign Assets Controls
(OFAC). Most commercially available software should include
the OFAC list, in addition to other watch lists. Glaser
emphasized that these are tools banks should consider using
in an effort to manage their overall risk portfolios. One of
the bank heads suggested to Glaser that he should tell the
CBJ to require banks to upload the OFAC list.


16. (C) Union Bank's director told Glaser that alternate
remittance systems were most common in foreign worker
communities in Jordan, such as those from Egypt, the
Philippines and Sri Lanka. These workers use the systems
because of lower costs, and due to their familiarity in
dealing in cash. Glaser cautioned that these systems can
also be used by terrorists, while emphasizing that the USG
does not want to impinge on the ability of people to carry
out legitimate transfers of remittances through these
systems. For that reason, the registration of alternative
remittance systems brings transparency to the sector.

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CUSTOMS
--------------


17. (C) Customs Director General Ala Al-Bataineh told Glaser
that his focus on cash moving across Jordan's borders was
specifically geared to whether or not the bills were
counterfeit. He cited an incident in which a person carrying
$1 million was recently let go without any documentation once
the cash was determined to be genuine. Bataineh recognized
that the in-bound reporting requirement was ineffective
without associated penalties, and believed that imposing a
penalty for not declaring cash would require legislation.
(NOTE: Post will explore this option. END NOTE.) Bataineh
agreed that attention should be given to outbound reporting
requirements as well. Glaser recommended that Customs liaise
with the U.S. Bureau of Immigration and Customs Enforcement
to tap its expertise in detecting money Laundering, as well
as with the Rome office of the Secret Service on counterfeit
identification issues.

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PLANNING
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18. (C) Planning Minister Suhair Al-Ali (former head of
Citibank in Jordan) assured Glaser that, "the political will
to pass the AML law is there" within the government. She
said she is a strong supporter of passage, highlighting its
importance for attracting foreign investment. Al-Ali said
the issue of in-bound cash declaration requirements needed to
be addressed by the GoJ; Glaser mentioned that Jordan had
agreed to a regime for declaring cash at the recent MENA/FATF
meeting, noting, that the Director General of Customs had
told him there was no penalty for failure to declare.


19. (U) Acting A/S Glaser cleared this message.

HALE
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