TREASURY UNDERSECRETARY LEVEY PRESSES GOT ON WEAK

S E C R E T SECTION 01 OF 06 ANKARA 003863 SIPDIS TREASURY FOR OTFI - U/S LEVEY, ASZUBIN AND RLEBENSON JUSTICE FOR SUZANNE HAYDEN E.O. 12958: DECL: 07/05/2014 TAGS: KTFN EFIN PTER TU SUBJECT: TREASURY UNDERSECRETARY LEVEY PRESSES GOT ON WEAK TERROR FINANCE REGIME Classified By: Charge d'Affaires Nancy McEldowney for reason 1.4(c). This is an action request. See para 15. 1.(SBU) Summary: In a series of meetings June 23, Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey pressed GOT officials on the inadequacy of their regime to combat the financing of terrorism. Pointing out the likelihood of difficulty for Turkey with its upcoming review by the Financial Action Task Force (FATF) Levey brought to the attention of apparently unwitting Ministers of Finance and Justice just how weak their regime currently is. The two ministers encouraged U/S Levey to send them a letter laying out the problems, thereby providing a significant opportunity for the U.S. to communicate the problems to the ministerial level. Both the President of Turkey,s Financial Intelligence Unit (MASAK) and the Director General of Police reacted defensively, however. In all the meetings, the Turkish counterparts emphasized Turkey,s 40 years of experience with PKK terrorism which has taken an alleged toll of 30,000 people. Noticably absent were references to the November 2003 al-Qaida affiliated Istanbul bombings which claimed hundreds of lives. Post proposes a draft letter below, on which it requests Washington agencies, comments as soon as possible. End Summary. ¶2. (SBU) U/S Levey was accompanied to all meetings by Senior Policy Advisor Adam Szubin and Advisor Rachel Lebenson as well as Emboffs. Charge McEldowney participated in the two meetings with Ministers. U/S Levey,s Message: -------------- ¶3. (SBU) In all the meetings, U/S Levey laid out U.S. concerns that Turkey could have serious difficulties with its early 2006 FATF review if the authorities did not take urgent action. Specifically, he pointed out that the current definition of terrorism was insufficient and out of step with the international community; that the criminalizing of terror finance and providing protection for bank filers of suspicious transaction (included in the draft MASAK law recently submitted to parliament) needed to be enacted quickly; and that there was room for improvement both in Turkish interagency coordination and in international information-sharing and cooperation. Saying that the U.S. wants Turkey to be successful, U/S Levey noted that the fact that Turkey has yet to successfully prosecute a money-laundering case is an indication that there is a problem. U/S Levey did point out that Turkey,s record on AML/CFT issues stands in stark contrast to its exemplary record on counter-narcotics. Not only is it desirable to have a more effective regime in place for its own sake, but an unsuccessful FATF review would be an embarrassment for Turkey. He went on to offer U.S. help where possible, and expressed our openness to a partnership in pursuing PKK financing, though he admitted we are not always successful in convincing our European counterparts to be helpful on the PKK issue. With terrorist groups in general, and with the PKK in particular, U/S Levey made the point that understanding the financing mechanisms was useful not only to interdict the financing but also to understand the group, s network. On the PKK issue, U/S Levey reminded his Turkish hosts that the U.S. has designated the PKK and all its aliases as terrorist organizations, making the financing of PKK a serious crime in the U.S. and punishable by imprisonment. MFA: Give the Finance Ministry a Blunt Message: -------------- - ¶4. (SBU) U/S Levey began his day meeting Foreign Ministry officials, who recognized there were problems in Turkey,s regime and encouraged U/S Levey to give a tough message. Levey met with Deputy U/S Nabi Sensoy (expected to be named Ambassador to the U.S.),Director General for Security Hayati Guven and Department Head Togan Oral. Ambassador Sensoy provided an overview of legal reforms that are in train, in addition to the MASAK law. Guven said that the other legal changes, such as broadening the definition of terrorism beyond attacks against Turkish citizens and threats to the Turkish State, to better conform to international norms, have now been sent by the Prime Ministry to other Ministries for comment. ¶5. (SBU) As MFA officials have done previously, Sensoy noted Turkey,s difficulties with asset freezes under UN Security Council resolution 1267, given that the UN-provided statements of case rarely have sufficient evidence to hold up in courts. As before, the MFA officials said the lists need to have more robust information attached to them so as to deal with this problem. Note: MFA officials have told us that both Yasin Al-Kadi and Nasreddin, whose assets are frozen in Turkey are appealing in the courts and could win. End Note. In response, U/S Levey said other countries are having similar problems and the U.S. would like to improve the lists system. He also offered U.S. help on specific names, if we have the information. ¶6. (SBU) Sensoy and the other GOT officials Levey met with, raised PKK and lamented that the international community did not pursue all terror groups with equal aggressiveness. In particular, Sensoy and the other GOT officials decried the passivity of many Western European countries in going after PKK support groups in their country. Sensoy said Turkey believes the PKK collects about 16 million Euros annually, largely from Germany, the Netherlands and Scandinavia. Sensoy noted his awareness of U.S. frustration with European non-cooperation on this issue as well. For this reason, he said Turkey supports UN Security Council resolution 1556 which called for studying the possibility of broadening 1267 beyond Al-Qaeda- and Taliban-linked groups. Turkey,s Financial Intelligence Unit Reacts Defensively: -------------- -------------- ¶7. (SBU) When Levey gave his message to Genc Osman Yarasli, the President of MASAK (Turkey,s Financial Intelligence Unit,or FIU, which has the lead on combating financial crime),the first reaction was defensive. Yarasli said it was not true, and that things are being done. Claiming there was a system in place to combat money-laundering and terrorism, Yarasli noted that changes in the international standards and conditions had caused Turkey to recognize defects in its system and to try to fix these, and Turkey was continuously updating its legislation to be compliant. Insisting that Turkey was trying to meet the FATF recommendations, he said Turkey had drafted a new law governing the operations of MASAK , pointing out that FATF had changed its recommendations three times since the 1990 s in addition to adding its 9 special recommendations on terrorism finance . Yarasli said, "we" had wanted the law passed before the end of the current session, which ends July 1 . Because of the parliament's heavy agenda, however, it now appears that it will not pass until parliament returns in the fall. Yarasli pointed out that Turkey has gone through an intense period of activity over the past three years, with its whole system changing as it meets EU and IMF requirements. Parliament, therefore has had a heavy agenda, including a complete revision of Turkey,s Penal Code. ¶8. (SBU) On the specific issue of sharing STRs with other countries, FIU,s, Yarasli said MASAK only shared STRs if they thought they were related to real criminal activity. (Note: FATF member FIUs normally share all STRs. End Note.) Yarasli also mentioned MASAK,s project to create an online system for filing STRs that would also facilitate information-sharing with other agencies, including law enforcement. Yarasli also pointed out that the law would change MASAK,s organizational structure to allow for a greater degree of specialization focused on information gathering, analysis, and international relations. When U/S Levey asked about how bank compliance was monitored, Yarasli explained that MASAK lacks authority to inspect banks, and therefore relies on the Bank Regulatory and Supervisory Agency,s (BRSA,s) sworn bank auditors. The BSRA only completes a review upon MASAK,s request; it does not carry out routine AML/CFT evaluations. U/S Levey reiterated that the changes in the international environment have been very significant, and other countries have already adjusted. "These are issues that are putting constraints on you and others who want to stop money-laundering." U/S Levey told Yarasli that he was not trying to suggest that nothing was being done, stating that he realizes some people in Turkey are working very hard on these issues. Instead, the issue is that changes in the international environment have been very significant, and other countries have already adjusted. ¶9. (SBU) U/S Levey asked Yarasli how the U.S. could assist Turkey. Yarasli said he had not yet discussed this with his Minister, but if the MASAK law is not passed until the fall, by the time the implementing regulations are in place it might be too late for the FATF review. Yarasli wondered whether the U.S. might not support a Turkish request to move back the date of the FATF review. U/S Levey responded that the U.S. does not control FATF and thought that the FATF deadline was creating useful momentum in Turkey. Finance and Justice Ministers Say they are Open to Follow-up: -------------- -------------- ¶10. (SBU) When Levey delivered his message to Finance Minister Unakitan, in Yarasli,s presence, it was clear that Unakitan was surprised by the extent of the problems. Unakitan expressed surprise that there were these problems, noting that former Ambassador Edelman had thanked him for his help. (Note: Unakitan is probably referring to one case on which Unakitan was ultimately helpful in passing us information, but only after months of delay on an Al-Qaeda-linked case that was being prosecuted in the U.S. End Note.) Like many GOT officials, Unakitan seemed to be under the impression that the new MASAK law would take care of deficiencies for the FATF review. U/S Levey made the point that beyond passing laws, it was important to implement them effectively so they have an effect on the ground. Levey went into some detail with Unakitan about the specifics of needed change, while Unakitan repeatedly turned to Yarasli for explanation. ¶11. (SBU) Unakitan said he would look into these issues more carefully, and asked for a list of cases about which the U.S. requested information, including from other ministries, and the Turkish side had not been cooperative. ¶12. (SBU) Justice Minister Cemil Cicek, in a shorter meeting, had a similar reaction. Like many GOT officials, Cicek described Turkey,s long history of suffering from terrorism, especially PKK terrorism, and lamented other countries, inadequate cooperation, especially in Europe. He cited that day,s lead news story: a Belgian court had ruled against a further trial of a leftist terrorist who had assassinated a prominent Turkish business executive in the 1990,s. Cicek noted that there was a different relationship with the U.S. on PKK, since the U.S. recognizes the PKK as a terrorist organization. But Cicek plead for the U.S. to do more against the PKK in Northern Iraq since the recent wave of PKK attacks in Turkey is causing loss of life. He specifically asked for U.S. cooperation on 150 PKK members in Northern Iraq that the GOT would like to have returned to Turkey. ¶13. (SBU) Cicek, like Unakitan, was open to the U.S. side sending a letter noting areas in which we could cooperate better, and floated the idea of a follow up meeting which could go into these issues in greater depth. TNP Director General Misunderstands: -------------- ¶14. (SBU) Like Yarasli, Turkish National Police Director General Gokhan Aydiner, took a defensive stance about Turkey's overall terrorism finance regime (for which he is not responsible) despite U.S. law enforcement agencies' relatively good cooperation with the TNP. Aydiner, uninformed about the issues Levey raised, said each country had its own structures, and it was inappropriate to compare "Anglo-Saxon" structures to Turkey, missing the point that U/S Levey was referring to FATF--not U.S.--requirements. Aydiner, too, asked for specific examples where "we" had failed to cooperate with the U.S. He then offered an example of U.S. non-cooperation with Turkey, on the case of Uzan family members in the U.S. (Note: Aydiner is unfortunately misinformed on this: U.S. law enforcement did cooperate with Turkish counterparts but found no evidence the Uzans were in the U.S. End Note.) On the specific issue of cooperation with MASAK, Aydiner claimed the interagency coordination was good: "MASAK does the desk work, and we do the field work." Aydiner, too, expressed frustration with Belgium over the same case that Cicek had cited. U/S Levey tried to break through Aydiner,s defensive posture by reiterating the good cooperation we have with the TNP, but Aydiner just continued with the same defensive tack. TNIO Director Appreciates Visit: -------------- ¶15. (S/NF) In a meeting with TNIO Deputy Under Secretary Mehmet Cemal Ozgoren (DDI equivalent) at the end of the day, U/S Levey and Ozgoren acknowledged the positive relationship our intelligence services share with each other. U/S Levey expressed his appreciation for the relationship and urged continued cooperation. Ozgoren spoke at length about Turkey,s long history of suffering from PKK-sponsored terrorism and identified the cash couriers and a hawala-like system as the two primary methods for moving money in support of terrorism. Ozgoren clarified that there is a traditional money transfer system, used mostly in rural Turkey, whereby foreign workers in Europe all send money to one person with a bank account in Turkey. That account holder then distributes money to the appropriate family members and friends. Ozgoren claimed that the head of MASAK is his personal friend and that the new legislation should allow MASAK to carry out financial investigations. Though Ozgoren concentrated mostly on PKK terrorism, U/S Levey pointed out that the methods used to understand PKK support networks are the same tools which can be used to investigate al-Qaida and other terrorist networks. (Note: This meeting was also reported in RMAS channel. End Note). Comment and Action Request: -------------- ¶16. (SBU) U/S Levey usefully delivered to senior GOT officials a wake-up call on the inadequacy of their terror finance regime and the likelihood of problems with Turkey,s upcoming FATF review. The two Ministers, response created the first major opening we have had to work intensively with the Turks on a policy (as opposed to enforcement). To keep up the momentum, Post proposes sending the following letter, focusing on the overall regime and how it should be strengthened. Please inform post of any Washington comments before Friday, July 8. Begin Text: Dear Ministers Unakitan and Cicek: It was a pleasure for Under Secretary Levey and I to discuss cooperation on combating the financing of terrorism. As you requested during our meetings, we are writing to lay out specific steps for improvement which we believe would make Turkey more effective in this area. As Under Secretary Levey said in our meetings, we want to work with you to do everything possible to combat the financing of terrorism and, more specifically, we want to help ensure the best possible outcome of Turkey, s upcoming review by the Financial Action Task Force. We have tried to make the list below as concise as possible. It is not meant to be an exhaustive list but rather a summay of measures that could be taken to have a more effective regime against terrorism finance. Based on our understanding of the current situation in Turkey, in order to best comply with the FATF recommendations on terrorism finance, we would recommend that the Turkish authorities: ¶1. Put in place as quickly as possible legal provisions that criminalize the financing of terrorism and allow "safe harbor" for bank filers of suspicious transaction reports. We note that these provisions have been included in legislation recently submitted to parliament. If this legislation is not passed quickly the implementing regulations may not be in place in time for the FATF review, which will require these regulations to be in place. ¶2. Ensure that Turkish law defines terrorism to include terrorist acts directed to other countries and the international community. Until these changes are passed, terrorists who have committed terrorist acts unrelated to Turkey would not be considered terrorists under Turkish law, and therefore could not be prosecuted, nor could those who finance them. The current definition of terrorism under Turkish law is out of step with international norms. ¶3. Strengthen the legal basis on which terrorist assets are frozen in Turkey. Currently Turkey,s freezing on the basis of UN resolutions and Council of Ministers decrees, could be subject to legal challenge. Moreover, it is narrowly based on Al-Qaeda- and Taliban-linked entities rather than all terrorist organizations. The process is cumbersome and slow, which defeats the point of freezing terrorist assets as soon as they are identified. This process should be refined, and its legal basis made more robust to be able to withstand court proceedings. ¶4. Adopt measures to regulate, license and monitor money transfer and informal remittance networks. (FATF Special recommendation 6). ¶5. Review and strengthen interagency coordination and information-sharing between MASAK, Turkish National Police, and prosecutors and all relevant Turkish agencies. Better coordination and information-sharing would increase the prospects for detection and effective prosecution of financial crimes. To our knowledge, there have been no successful prosecutions of money-laundering cases in Turkey, which stands in stark contrast to Turkey,s success on prosecuting drug-related crimes Better information-sharing could increase the likelihood of future convictions. ¶6. Review and strengthen coordination and information-sharing between MASAK and other FATF countries, Financial Intelligence Units (FIUs),and between Turkish law enforcement and other countries, law enforcement agencies. For example, not all suspicious transactions are shared between MASAK and other FIUs which is contrary to best practice among FATF countries. In order to advance on the issues discussed in Under Secretary Levey,s meetings, we propose the following action SIPDIS steps: --The U.S. Departments of Treasury, Justice and State stand ready to be of assistance in providing further clarification and sharing our experience and expertise. --In response to Minister Unakitan,s specific request, we have attached an illustrative example of a case in which, if the Turkish authorities had had the legal authority and institutional capacity to respond on a real-time basis to a U.S. request, we would have been in a better position to disrupt an international terrorist financing network. --As Minister Cicek suggested, the Embassy would look forward to a meeting with an interagency group of concerned Turkish officials to review these matters in greater depth. We would look forward to such a meeting in the coming weeks, before the end of August. --With respect to the PKK, as Under Secretary Levey explained when he was here, we are willing to support you and co-sponsor with you actions against the PKK,s financial network in any way that we can. We look to you to lead any initiative on this important matter. Please be assured that we offer these recommendations in the spirit of the close friendship and longstanding alliance between our two countries, and in the hope that these recommendations will help Turkey achieve the best possible outcome from its FATF review. Sincerely, Nancy McEldowney Charge d,Affaires His Excellency Kemal Unakitan, Minister of Finance, Republic of Turkey, Ankara. His Excellency Cemil Cicek, Minister of Justice Republic of Turkey, Ankara Copy to: Gokhan Aydiner, Director General, Turkish National Police Genc Osman Yarasli, President, MASAK Ambassador Nabi Sensoy, Ministry of Foreign Affairs End Text. U/S Levey has cleared this message. MCELDOWNEY MCELDOWNEY