Identifier
Created
Classification
Origin
05KUWAIT4214
2005-09-27 14:09:00
CONFIDENTIAL
Embassy Kuwait
Cable title:  

TERRORIST FINANCE: SUMMARY OF OFAC DIRECTOR

Tags:  EFIN ETTC KTFN PTER CVIS KVPR KU 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 05 KUWAIT 004214 

SIPDIS

STATE FOR EB/ESC/TFS LLAMBERT, S/CT TKUSHNER, NEA/ARPI
SWALKER, NEA/ARPI RSMYTH, NEA/RA LLEE, IO/PSC BFITZGERALD,
TREASURY FOR TFFC DGLASER AND OFAC FOR RWERNER, NSC FOR
JZARATE AND THINNEN, LONDON FOR LTSOU, MANAMA FOR JBEAL

E.O. 12958: DECL: 09/21/2015
TAGS: EFIN ETTC KTFN PTER CVIS KVPR KU
SUBJECT: TERRORIST FINANCE: SUMMARY OF OFAC DIRECTOR
WERNER'S MEETINGS WITH GOK OFFICIALS

REF: KUWAIT 4111

Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 05 KUWAIT 004214

SIPDIS

STATE FOR EB/ESC/TFS LLAMBERT, S/CT TKUSHNER, NEA/ARPI
SWALKER, NEA/ARPI RSMYTH, NEA/RA LLEE, IO/PSC BFITZGERALD,
TREASURY FOR TFFC DGLASER AND OFAC FOR RWERNER, NSC FOR
JZARATE AND THINNEN, LONDON FOR LTSOU, MANAMA FOR JBEAL

E.O. 12958: DECL: 09/21/2015
TAGS: EFIN ETTC KTFN PTER CVIS KVPR KU
SUBJECT: TERRORIST FINANCE: SUMMARY OF OFAC DIRECTOR
WERNER'S MEETINGS WITH GOK OFFICIALS

REF: KUWAIT 4111

Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d)


1. (C) Summary. On September 21, OFAC Director Robert Werner
met separately with GOK officials from the Central Bank and
Ministries of Finance, Foreign Affairs, Social Affairs and
with Kuwait Customs to discuss continued bilateral
cooperation on combating terrorist finance and money
laundering (CTF/AML). Werner underscored the importance of
legal reform to criminalize terror finance and urged improved
internal GOK coordination. He welcomed GOK feedback on OFAC
policies and regulations to help overcome any procedural
challenges. GOK officials reaffirmed the government's
commitment to legal reform to further strengthen the
country's CTF/AML regime. They welcomed USG technical
assistance and cited concerns with certain designation
modalities, including the inherent errors in English listings
of Arabic names. Werner offered to explore other
alternatives, including possibly listing names in the
original Arabic. End Summary.


2. (C) On September 21, OFAC Director Robert Werner,
accompanied by other Embassy and Treasury officers, met with
the following GOK officials to discuss ongoing USG-GOK
efforts to combat terrorist finance and money laundering:

--Riad Al-Hajri, Attorney General for Public Monies
Prosecution, Public Prosecutor's Office
--Sheikh Salem Abdulaziz Al-Sabah, Central Bank Governor
--Faisal Al-Hajji, Minister of Social Affairs and Labor
--Khaled Al-Muqames, Director for Coordination and Follow-up,
Ministry of Foreign Affairs
--Mustafa Al-Shamali, Under Secretary, Ministry of Finance
--Ameen Al-Mudarres, Assistant Director General, Kuwait
Customs.

Meeting with Attorney General
--------------


3. (C) In his meeting with Riad Al-Hajri, the Attorney

General for Public Monies Prosecution at the Public
Prosecutor's Office (PPO),Werner reaffirmed the
long-standing ties between both countries, calling for
continued bilateral cooperation on CTF/AML. Werner solicited
Al-Hajri's input on the GOK's Financial Intelligence Unit
(FIU),including Egmont Group membership; the PPO's access to
suspicious transaction reports (STRs); the status of the
pending revision of the 2002 AML law; and the status of
foreign contract judges in Kuwait.


4. (C) Al-Hajri noted that the 2002 law on AML failed to
clearly define the FIU's role, resulting in the Council of
Minister's (cabinet) decision to incorporate the FIU in the
Central Bank of Kuwait. He commented that unlike the PPO,
the FIU was merely an administrative entity that lacked any
legal powers. Al-Hajri complained that lack of Egmont Group
membership eroded the FIU's ability to access timely
information from abroad, ultimately impacting his own
office's ability to prosecute. (Note: Egmont membership
requires FIUs to share information freely. Current GOK law
prohibits Kuwait's FIU from doing so without Public
Prosecutor approval. End note.) He lamented that "Egmont
doesn't talk to us" and also alleged that FIU cooperation
with his office was lacking and that the PPO did not have
direct access to STRs, claims later refuted by the Central
Bank Governor.


5. (C) Werner stressed that without legal reform, the GOK's
ability to access timely and relevant information from Egmont
and other entities would be limited. He underscored that
information sharing and access to such organizations were
critical to OFAC's own CTF/AML efforts. Al-Hajri concurred
and reaffirmed the GOK's commitment to enacting legal reform,
pointing to the ongoing drafting efforts of the National
Committee to Combat Money Laundering and Terrorist Finance
(NC). Al-Hajri explained that the new law was needed to
expand the PPO's legal powers, along the lines of OFAC's own
broad authorities, as described by Werner. Al-Hajri
explained that the new law would incorporate GCC and
international CTF/AML requirements, including Kuwaiti
membership in Egmont. However, he commented that there were
"some" elements who were keen on stifling reform. Al-Hajri
agreed to take up Werner's offer of technical assistance on
the new legislation once a draft is completed.


6. (C) Regarding foreign judges in Kuwait, Al-Hajri explained
that the majority were Egyptian, resulting from Kuwait's
continued shortage of judges and long-standing reliance on
Egyptian legal expertise. He welcomed any U.S. assistance,
including possible legal workshops to help strengthen the
Kuwaiti legal sector.

Meeting with Central Bank Governor
--------------


7. (C) In his meeting with Sheikh Salem AbdulAziz Al-Sabah,
Governor of the Central Bank of Kuwait (CBK),and other CBK
officials (Deputy Governor, Heads of On-Site Supervision and
AML Units) Werner reiterated his call for continued bilateral
dialogue and cooperation on CTF/AML and solicited the
governor's input on the pending AML legislation, coordination
between the CBK and PPO, CBK actions in support of terror
finance designations, and CBK monitoring of exchange houses.


8. (C) Al-Sabah began by noting the long-standing ties
between CBK and OFAC pre-dating September 11, 2001. The
governor noted that both institutions were pursuing the same
CTF/AML objectives and the CBK would not hesitate to seek
assistance from OFAC or other USG entities to further
strengthen its efforts. Echoing Al-Hajri's frustration with
current AML legislation; Al-Sabah noted that the new draft
legislation would address the FIU's role and help eliminate
procedural redundancies and streamline intra-governmental
coordination and information sharing on CTF/AML.


9. (C) Al-Sabah refuted Al-Hajri's claims about the lack of
cooperation between the FIU and PPO and that the PPO did not
have access to STRs, noting that by law, the STRs were
required to be sent by banks to the PPO and CBK separately.
He clarified that only the PPO can raise a legal case against
an individual or entity but that the CBK had full
authorization from the PPO to follow-up with any financial
institution under question. He noted that the CBK had the
authority to freeze both monetary and materiel assets upon
receipt of Foreign Ministry authorization.


10. (C) Al-Sabah explained that the CBK maintains a
categorized database of all STRs sorted by banks, exchange
houses, investment firms or transaction type and that
priority is given to TF/AML regulations, with samples of
transactions taken at random to ensure compliance. All banks
are instructed to report STRs to the CBK or face "very severe
penalties" of no less than 6000 Kuwaiti dinars (approximately
$20,600).


11. (C) With regard to terror finance designations, Al-Sabah
said that the CBK and other Kuwaiti financial institutions
rely on MFA notifications, UN and OFAC lists for the latest
updates. Al-Sabah voiced concerns with designations in
English of Arabic names, citing the probability of mistaken
identity and error resulting from incorrect translation or
limited information (Note: this issue came up repeatedly in
OFAC's meetings with other GOK and banking officials. End
Note.) As an added precaution, Al-Sabah noted that CBK name
searches are also cross-checked with local civilian
identification numbers issued to all Kuwaiti and non-Kuwaiti
residents. Werner voiced similar concern with the current
practice of listing Arabic names in English. He encouraged
the CBK to provide OFAC with additional identifier
information as it becomes available and offered to explore
the possibility of listing names in Arabic.


12. (C) On charity oversight, Al-Sabah referred to a 2001
Council of Ministers (cabinet) decision allowing only those
charities with GOK authorization to transfer funds abroad.
He added that no charities can open bank accounts without the
requisite approval and licenses from the Ministry of Social
Affairs and Labor, explaining that banks recognize the
importance of compliance and cooperation on this issue. As
an example, the governor cited the initiative on the part of
a local Kuwaiti bank to report to the Central Bank an attempt
by the brother of an Al-Qaeda affiliate to open an account.


13. (C) Werner noted that exchange houses and unofficial
"hawalas" posed a potential problem given the challenges of
effective oversight and accountability. Al-Sabah pointed out
that the CBK maintains a monthly exchange house transaction
database and that individual transactions greater than 3000
Kuwait Dinar (approx. $10,300) must be reported to the CBK.
He stressed that the opaque and unreliable nature of hawala
networks discouraged the GOK from authorizing the practice in
Kuwait. He explained that financial institutions are only
authorized to transfer funds to other licensed institutions
and not individuals. Al-Sabah commented that both Kuwait and
the United States were confronting the same terrorist threats
and that success would be guaranteed only through continued
cooperation and vigilance.

Meeting with Minister of Social Affairs and Labor
-------------- --------------


14. (C) Ambassador accompanied Werner to the meeting with
Faisal Al-Hajji, Minister of Social Affairs and Labor, to
discuss the ministry's role as the primary GOK oversight
authority of local charities. Werner acknowledged the
important role played by charities in every society and
called for vigilance to ensure that their good work was not
undermined by nefarious elements seeking to exploit
institutional weaknesses. He encouraged close dialogue and
cooperation and welcomed Al-Hajji's input on the GOK's
charity oversight measures.


15. (C) Al-Hajji praised the GOK's ongoing close ties with
the U.S. and welcomed the opportunity to exchange suggestions
and ideas with USG counterparts. He asserted that his
ministry had taken all appropriate measures to control and
supervise charities, including the removal of approximately
95 charity donation kiosks. He explained that as an added
measure, authorized charities would only be allowed to
collect zakat (alms) during the month of Ramadan through the
sale of government-issued coupons (see reftel for details).
Al-Hajji said that authorized charities were on board and
that a public relations campaign was underway to officially
announce the new program. He was less enthusiastic about
Werner's proposal to have payments for coupons made directly
to the ministry, noting that such an alternative would prove
too confusing for the average zakat donor.


16. (C) He also explained that an external auditing firm
would be hired soon to provide monthly reports on charities'
income and outflow statements to ensure compliance and
accountability. According to the minister, all financial
transactions conducted by authorized charities require
ministry approval and that any suspicious activities or
unauthorized transfers would be reported to the CBK. He said
that during the past three years, the ministry had seen no
indication of violations by charities (Note: only six Kuwaiti
charities and the GOK itself are authorized to transfer funds
abroad. End note.)


17. (C) Al-Hajji clarified that charities were only allowed
to transfer funds to other authorized organizations abroad,
not individuals, and that the ministry relied on host country
governments, working in coordination with the Kuwaiti MFA, to
ensure compliance on the part of its local entities. Both
the Ambassador and Werner expressed concern with the GOK's
seeming reliance on recipient (and usually poorer) countries
to reconcile and regulate their own institutions, pointing
out that this was a weak link in the process.


18. (C) Ambassador stressed that the burden was on Kuwait to
ensure that its charitable contributions were being spent
properly and offered USG follow-up on any suspicious
transactions. Al-Hajji welcomed U.S. assistance in general
but noted, in the GOK's defense that fund transfers for
specific aid projects abroad were easier to control and that
visiting delegations from the ministry's charity oversight
office traveled abroad periodically to monitor progress for
such projects.


19. (C) Al-Hajji said that charities were under intense
scrutiny by the government and that he remained committed
despite the charities' widespread complaints of excessive
regulations. He said that the ministry's goal was to have
100% oversight of charities and that the large charities had
"put all their cards on the table." He expressed general
satisfaction with their cooperation and noted that he has
urged charities to focus more of their donations domestically
in support of Kuwait's own poor and needy.


20. (C) Werner praised the minister for his "clear and
admirable commitment," echoing his views on the challenges
posed by stringent charity oversight. Werner suggested that
charities would find the OFAC list a useful screening
mechanism for potential donors and recipients (Note: The
Minister did not understand the suggestion on the use by the
charities of the OFAC lists. Embassy will follow-up with his
staff.)

Meeting with Foreign Affairs Ministry
--------------


21. (C) In his meeting with Khaled Mohammed Al-Muqames,
Director of the MFA's Coordination and Follow-up Office,
Werner provided an overview of OFAC responsibilities and the
USG terror finance designation process. He solicited
Al-Muqames's feedback on the MFA's notification process for
designations, encouraged MFA feedback on procedural issues
arising from designations problems, voiced concern about the
vulnerabilities of charities abroad, and urged continued
cooperation on information sharing.


22. (C) Al-Muqames explained that his office received
terrorist designation notifications from both the UN and the
U.S. Embassy and that such notifications were forwarded in
writing to the CBK the same day as received. Echoing similar
concerns raised by the Central Bank Governor, Al-Muqames
requested additional identifiers for Arabic designees,
including, e.g., the names of mothers or other relatives, to
allow for more accurate identification by government and
banking authorities.


23. (C) With regard to charities, Al-Muqames said although
the GOK had not received any evidence linking Kuwaiti
charities to terrorism, Kuwaiti embassies had been instructed
to track the activities of Kuwaiti charities abroad in order
to protect Kuwait's international reputation and prevent
exploitation by extremists. He expressed the GOK's interest
in "widening our cooperation" on charity oversight.
Al-Muqames echoed USG concerns in the war against terrorism,
stating that Kuwait itself was a target. He reaffirmed the
need for close cooperation, and observed that when it comes
to defeating terrorism "we speak the same language."


Meeting with Finance Ministry
--------------


24. (C) In his meeting with Mustafa Jassem Al-Shamali, Under
Secretary at the Ministry of Finance, Werner solicited

SIPDIS
Al-Shamali's views on the pending revision to the draft AML
legislation, stressing the importance of Egmont membership;
encouraged closer GOK inter-governmental coordination on
CTF/AML efforts and provided an overview of OFAC activities,
including efforts to target counternarcotics and weapons of
mass destruction financial networks.


25. (C) Al-Shamali reaffirmed the GOK's commitment to
cooperation on CTF/AML measures and praised the efforts of
the National Committee and the Central Bank in the revision
of the pending draft legislation. He said that the new draft
would take into account the recommendations of all relevant
GOK ministries and that legal reform would help address any
coordination problems between GOK entities.


26. (C) He explained that the FIU, currently housed in the
Central Bank, was originally an entity of the Finance
Ministry. He said internal regulations, issued by the
Finance Ministry in July, articulated the procedures for
supporting the National Committee's drafting efforts and the
subsequent implementation of the revised AML law. Al-Shamali
pointed to close cooperation between U.S. and Kuwaiti
Customs. (Note: Kuwait Customs falls under the authority of
the Finance Ministry.)


Meeting with Kuwait Customs
--------------


27. (C) In his meeting with Ameen Al-Mudarres, Assistant
Director General for Kuwait Customs (KC),Werner underscored
the important role played by customs agencies in the broader
CTF/AML effort, pointing to OFAC's own fruitful relations
with U.S. Customs in successfully targeting terror finance
and money laundering networks. Al-Mudarres called for
continued bilateral cooperation and praised his agency's
close cooperation with U.S. Customs, pointing to the valuable
support being provided to Kuwait Customs by two embedded U.S.
advisors. He explained that KC's new Money Investigative
Unit (guided by a U.S. Customs Advisor) was already having a
positive impact against money laundering. Al-Mudarres noted
that KC's membership on the National Committee to Combat
Money Laundering and Terror Finance allowed the agency to
play a central role in the broader CTF/AML effort. He was
appreciative of ongoing U.S. training opportunities afforded
by the International Visitors Program and reaffirmed KC's
commitment to making headway against money laundering.


*********************************************
Visit Embassy Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/

You can also access this site through the
State Department's Classified SIPRNET website
*********************************************

LEBARON