Identifier
Created
Classification
Origin
05KUWAIT4717
2005-11-08 12:46:00
CONFIDENTIAL
Embassy Kuwait
Cable title:
POST ASSESSMENT OF KUWAIT CASH COURIER ENVIRONMENT
how-toVZCZCXRO1563 OO RUEHDE DE RUEHKU #4717/01 3121246 ZNY CCCCC ZZH O 081246Z NOV 05 FM AMEMBASSY KUWAIT TO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE RUEHC/SECSTATE WASHDC IMMEDIATE 1658 INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY RUEHLO/AMEMBASSY LONDON PRIORITY 1075
C O N F I D E N T I A L SECTION 01 OF 03 KUWAIT 004717
SIPDIS
SIPDIS
STATE FOR EB/ESC/TFS JCLARK, S/CT TKUSHNER, NEA/ARPI
SWALKER AND RSMYTH, NEA/RA LLEE, IO/PSC BFITZGERALD,
TREASURY FOR TFFC DGLASER AND OFAC FOR RWERNER, NSC FOR
JZARATE, LONDON FOR LTSOU, MANAMA FOR JBEAL
E.O. 12958: DECL: 11/08/2015
TAGS: EFIN ETTC KTFN PTER PGOV KU TERROR FINANCE
SUBJECT: POST ASSESSMENT OF KUWAIT CASH COURIER ENVIRONMENT
REF: A. TREASURY 1346
B. KUWAIT 4672
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 03 KUWAIT 004717
SIPDIS
SIPDIS
STATE FOR EB/ESC/TFS JCLARK, S/CT TKUSHNER, NEA/ARPI
SWALKER AND RSMYTH, NEA/RA LLEE, IO/PSC BFITZGERALD,
TREASURY FOR TFFC DGLASER AND OFAC FOR RWERNER, NSC FOR
JZARATE, LONDON FOR LTSOU, MANAMA FOR JBEAL
E.O. 12958: DECL: 11/08/2015
TAGS: EFIN ETTC KTFN PTER PGOV KU TERROR FINANCE
SUBJECT: POST ASSESSMENT OF KUWAIT CASH COURIER ENVIRONMENT
REF: A. TREASURY 1346
B. KUWAIT 4672
Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d)
1. (C) Per reftel A request, the following is Post's
assessment of Kuwait's cash courier environment.
At the Border and Legal Environment
--------------
2. (C) The GOK's 2002 law (No. 35) "Concerning Combating
Money Laundering" criminalizes cash smuggling within the
context of money laundering and criminal activity. Article 2
of the law makes illegal "the conversion, transfer,
possession, acquiring, using, keeping or receiving money,
knowing that that they are derived from a crime or one of the
acts of participation herein. The concealment or disguise of
the true nature of the money, its origin, place, manner of
disposition, movement or rights to it or its possession,
knowing that it is derived from a crime or any act of
participation in the same."
3. (C) The GOK currently only has a cash entry declaration
policy as stipulated in the 2002 law, and subsequent Finance
Ministry resolutions. GOK officials, most notably the
Finance Minister, are skeptical about the practical
applicability of cash exit declarations in Kuwait and are
therefore reluctant to support the enactment of such measures
in the foreseeable future (see ref B). Article 4 of the law
states that "on entering the country, every person shall
inform the customs authorities of any national or foreign
currency, golden bars or any other precious materials in
his/her possession that exceeds three thousand dinars (Note:
approximately $10,000) or equivalent in foreign currency."
According to U.S. Customs advisors, these legal requirements
are not well publicized nor are they immediately visible to
travelers arriving through key entry points (e.g., airports,
ports).
4. (C) In July 2005, the Finance Ministry issued a
resolution (No. 9) requiring KGAC to "prepare a Declaration
Form (for entry only) in coordination with the related
bodies" and making Kuwait General Administration of Customs
(KGAC) "responsible for receiving the Declaration Form." On
August 15, the Director General of KGAC directed the KGAC
Investigations Office to execute the ministerial resolution.
It is Post's understanding that the forms have not been
printed pending funding allocations from the Finance Ministry
to cover printing and distribution costs. (Note: Finance
Minister Undersecretary Al-Shamali informed Econoffs in
October that KGAC has since been directed to fund the
printing costs, estimated at $34,000, from its own budget.)
5. (C) The GOK does maintain an active inspection facility
at Abdali near the Iraqi border to inspect and seize cash and
other smuggled goods bound for Iraq. This facility is
equipped with an x-ray machine and is staffed by Kuwaiti
police and customs inspectors. U.S. Customs advisors are
working with KGAC to replicate the efforts of the Abdali
facility at other Kuwait entry points. In an effort to
outsource its revenue collection program, KGAC has signed a
contract with two large private Kuwaiti firms (Global and
PWC) to begin customs revenue collection at entry points as
part of KGAC's broader privatization effort.
6. (C) While corruption does not appear to be recurrent
and/or systemic, KGAC officials, by the virtue of their jobs,
remain vulnerable to bribery and extortion. In an effort to
counter such vulnerabilities, U.S. Customs advisors, working
directly with KGAC officials, including the Director General,
have been successful in raising awareness and sensitivities
about the risks posed by cash couriers, particularly within
the context of terrorist financing.
The Political Environment
--------------
7. (C) Based on discussions with Emboffs, senior GOK
officials are aware of the problems and challenges posed by
successfully countering the informal cash courier networks.
The main GOK entities in the CTF/AML effort are the Ministry
of Finance (policies),Central Bank's FIU (reporting),
Ministry of Interior (enforcement),the Public Prosecutor
(investigations),Ministry of Social Affairs and Labor
(charity oversight) and the KGAC (secondary investigative
KUWAIT 00004717 002 OF 003
role). GOK officials continue to express their commitment to
addressing legal and systemic shortfalls and are redrafting
the 2002 law to strengthen the country's CTF/AML regime.
Sustained engagement with the GOK leadership remains an
important priority to ensure tangible progress on these and
other CTF/AML measures.
8. (C) The degree of effective information sharing among
relevant GOK agencies varies depending on bureaucratic
rivalries and potential systemic deficiencies resulting from
inadequate resourcing and over-centralized decision making.
Information sharing externally is hampered by the lack of
Egmont Group membership for Kuwait's FIU (Note: Current GOK
policies require the FIU to secure the approval of the Public
Prosecutor's Office prior to sharing information with non-GOK
entities.)
9. (C) The Central Bank's AML unit and FIU (housed in
Central Bank) are well-versed in FATF rules and regulations,
including Special Recommendation IX on cash couriers. The
Central Bank also enacts and maintains good oversight of
Kuwait's banking and financial sector. Ambassador and
visiting senior USG officials, most recently Treasury DAS
Glaser and OFAC Director Werner, have engaged the Central
Bank and other relevant GOK agencies on these and other
CTF/AML priorities. However, more remains to be done to
overcome delayed execution of existing cash declaration
policies and secure GOK support for a cash exit declaration
policy to augment the Government's overall CTF/AML efforts.
USG Assistance
--------------
10. (C) Since 1992, the GOK has funded a U.S. Customs
Advisory program to help strengthen its customs enforcement
regime. There are presently two U.S. Customs advisors,
assigned to KGAC, working directly with KGAC officials,
including the Director General, to strengthen the KGAC's
operations. Through daily interactions and formal training
seminars, hosted by the advisors and other USG participants
(most recently in March 2005) KGAC officials are increasingly
exposed to new methods and ways of assessing the threats
posed by money laundering and terrorism financing. However,
sustained training, at all levels, is needed to enhance KGAC
performance and institutional awareness.
11. (C) On December 11-14, DHS and KGAC, in coordination
with Post, will host a conference on money laundering and
terrorism financing for GOK officials in order to expand
intra-GOK awareness and understanding of CTF/AML priorities
and objectives.
12. (C) Apart from in-country training conducted by U.S.
Customs, Post is not aware of any other technical assistance
or training relating to cash couriers conducted by the USG or
other countries. GOK contacts in different agencies welcome
and request continued USG technical assistance in all fields
related to CTF/AML, ranging from legal reform to
investigative training. The U.S. Customs advisors are
working closely with KGAC offices to identify outstanding
equipment needs to enhance KGAC operations. KGAC officials
benefited from training in the 1990s at the Foreign Law
Enforcement Training Center and would welcome similar
training today. These and other practical training measures,
either in the U.S. or in Kuwait, would foster greater GOK
activism and improve their operational capacity.
The Strategic Picture
--------------
13. (U) Post concurs with reftel points outlining essential
elements to combating terrorists' use of cash couriers and
recommends adding: "Ensuring senior host-government
awareness and commitment to adopting, implementing and
sustaining policies to ensure timely and tangible success
against cash smugglers and the broader CTF/AML effort."
*********************************************
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
*********************************************
KUWAIT 00004717 003 OF 003
LEBARON
SIPDIS
SIPDIS
STATE FOR EB/ESC/TFS JCLARK, S/CT TKUSHNER, NEA/ARPI
SWALKER AND RSMYTH, NEA/RA LLEE, IO/PSC BFITZGERALD,
TREASURY FOR TFFC DGLASER AND OFAC FOR RWERNER, NSC FOR
JZARATE, LONDON FOR LTSOU, MANAMA FOR JBEAL
E.O. 12958: DECL: 11/08/2015
TAGS: EFIN ETTC KTFN PTER PGOV KU TERROR FINANCE
SUBJECT: POST ASSESSMENT OF KUWAIT CASH COURIER ENVIRONMENT
REF: A. TREASURY 1346
B. KUWAIT 4672
Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d)
1. (C) Per reftel A request, the following is Post's
assessment of Kuwait's cash courier environment.
At the Border and Legal Environment
--------------
2. (C) The GOK's 2002 law (No. 35) "Concerning Combating
Money Laundering" criminalizes cash smuggling within the
context of money laundering and criminal activity. Article 2
of the law makes illegal "the conversion, transfer,
possession, acquiring, using, keeping or receiving money,
knowing that that they are derived from a crime or one of the
acts of participation herein. The concealment or disguise of
the true nature of the money, its origin, place, manner of
disposition, movement or rights to it or its possession,
knowing that it is derived from a crime or any act of
participation in the same."
3. (C) The GOK currently only has a cash entry declaration
policy as stipulated in the 2002 law, and subsequent Finance
Ministry resolutions. GOK officials, most notably the
Finance Minister, are skeptical about the practical
applicability of cash exit declarations in Kuwait and are
therefore reluctant to support the enactment of such measures
in the foreseeable future (see ref B). Article 4 of the law
states that "on entering the country, every person shall
inform the customs authorities of any national or foreign
currency, golden bars or any other precious materials in
his/her possession that exceeds three thousand dinars (Note:
approximately $10,000) or equivalent in foreign currency."
According to U.S. Customs advisors, these legal requirements
are not well publicized nor are they immediately visible to
travelers arriving through key entry points (e.g., airports,
ports).
4. (C) In July 2005, the Finance Ministry issued a
resolution (No. 9) requiring KGAC to "prepare a Declaration
Form (for entry only) in coordination with the related
bodies" and making Kuwait General Administration of Customs
(KGAC) "responsible for receiving the Declaration Form." On
August 15, the Director General of KGAC directed the KGAC
Investigations Office to execute the ministerial resolution.
It is Post's understanding that the forms have not been
printed pending funding allocations from the Finance Ministry
to cover printing and distribution costs. (Note: Finance
Minister Undersecretary Al-Shamali informed Econoffs in
October that KGAC has since been directed to fund the
printing costs, estimated at $34,000, from its own budget.)
5. (C) The GOK does maintain an active inspection facility
at Abdali near the Iraqi border to inspect and seize cash and
other smuggled goods bound for Iraq. This facility is
equipped with an x-ray machine and is staffed by Kuwaiti
police and customs inspectors. U.S. Customs advisors are
working with KGAC to replicate the efforts of the Abdali
facility at other Kuwait entry points. In an effort to
outsource its revenue collection program, KGAC has signed a
contract with two large private Kuwaiti firms (Global and
PWC) to begin customs revenue collection at entry points as
part of KGAC's broader privatization effort.
6. (C) While corruption does not appear to be recurrent
and/or systemic, KGAC officials, by the virtue of their jobs,
remain vulnerable to bribery and extortion. In an effort to
counter such vulnerabilities, U.S. Customs advisors, working
directly with KGAC officials, including the Director General,
have been successful in raising awareness and sensitivities
about the risks posed by cash couriers, particularly within
the context of terrorist financing.
The Political Environment
--------------
7. (C) Based on discussions with Emboffs, senior GOK
officials are aware of the problems and challenges posed by
successfully countering the informal cash courier networks.
The main GOK entities in the CTF/AML effort are the Ministry
of Finance (policies),Central Bank's FIU (reporting),
Ministry of Interior (enforcement),the Public Prosecutor
(investigations),Ministry of Social Affairs and Labor
(charity oversight) and the KGAC (secondary investigative
KUWAIT 00004717 002 OF 003
role). GOK officials continue to express their commitment to
addressing legal and systemic shortfalls and are redrafting
the 2002 law to strengthen the country's CTF/AML regime.
Sustained engagement with the GOK leadership remains an
important priority to ensure tangible progress on these and
other CTF/AML measures.
8. (C) The degree of effective information sharing among
relevant GOK agencies varies depending on bureaucratic
rivalries and potential systemic deficiencies resulting from
inadequate resourcing and over-centralized decision making.
Information sharing externally is hampered by the lack of
Egmont Group membership for Kuwait's FIU (Note: Current GOK
policies require the FIU to secure the approval of the Public
Prosecutor's Office prior to sharing information with non-GOK
entities.)
9. (C) The Central Bank's AML unit and FIU (housed in
Central Bank) are well-versed in FATF rules and regulations,
including Special Recommendation IX on cash couriers. The
Central Bank also enacts and maintains good oversight of
Kuwait's banking and financial sector. Ambassador and
visiting senior USG officials, most recently Treasury DAS
Glaser and OFAC Director Werner, have engaged the Central
Bank and other relevant GOK agencies on these and other
CTF/AML priorities. However, more remains to be done to
overcome delayed execution of existing cash declaration
policies and secure GOK support for a cash exit declaration
policy to augment the Government's overall CTF/AML efforts.
USG Assistance
--------------
10. (C) Since 1992, the GOK has funded a U.S. Customs
Advisory program to help strengthen its customs enforcement
regime. There are presently two U.S. Customs advisors,
assigned to KGAC, working directly with KGAC officials,
including the Director General, to strengthen the KGAC's
operations. Through daily interactions and formal training
seminars, hosted by the advisors and other USG participants
(most recently in March 2005) KGAC officials are increasingly
exposed to new methods and ways of assessing the threats
posed by money laundering and terrorism financing. However,
sustained training, at all levels, is needed to enhance KGAC
performance and institutional awareness.
11. (C) On December 11-14, DHS and KGAC, in coordination
with Post, will host a conference on money laundering and
terrorism financing for GOK officials in order to expand
intra-GOK awareness and understanding of CTF/AML priorities
and objectives.
12. (C) Apart from in-country training conducted by U.S.
Customs, Post is not aware of any other technical assistance
or training relating to cash couriers conducted by the USG or
other countries. GOK contacts in different agencies welcome
and request continued USG technical assistance in all fields
related to CTF/AML, ranging from legal reform to
investigative training. The U.S. Customs advisors are
working closely with KGAC offices to identify outstanding
equipment needs to enhance KGAC operations. KGAC officials
benefited from training in the 1990s at the Foreign Law
Enforcement Training Center and would welcome similar
training today. These and other practical training measures,
either in the U.S. or in Kuwait, would foster greater GOK
activism and improve their operational capacity.
The Strategic Picture
--------------
13. (U) Post concurs with reftel points outlining essential
elements to combating terrorists' use of cash couriers and
recommends adding: "Ensuring senior host-government
awareness and commitment to adopting, implementing and
sustaining policies to ensure timely and tangible success
against cash smugglers and the broader CTF/AML effort."
*********************************************
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
*********************************************
KUWAIT 00004717 003 OF 003
LEBARON