MENA FATF PLENARY - OFF TO A GOOD START

UNCLAS SECTION 01 OF 03 MANAMA 000684

SIPDIS

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STATE FOR S/CT, EB/ESC/TFS, INL/C/CP, H, NEA/ARPI
TREASURY FOR ZARATE, GLASER, AND MURDEN
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SUBJECT: MENA FATF PLENARY - OFF TO A GOOD START

Sensitive but unclassified; please protect accordingly.


1. (U) Summary. The first plenary meeting of the newly
created Middle East and North African Financial Action Task
Force (MENA FATF) was held in Manama, Bahrain April 11-14.
The United States is an observer country to the MENA FATF and
Treasury DAS Glaser attended as the USG representative.
Representatives from the 14 member countries of the MENA FATF
held a productive meeting led by President Mohammed Baasiri
with informal leadership from the representatives of Kuwait
and the UAE. The MENA FATF created permanent working groups
on Mutual Evaluation and Typologies, and three ad hoc
committees on hawala, cash couriers, and charities. They
also approved the budget and agreed to appoint accounting
firm BDO Jawad Habib as its external auditor. The group also
discussed the status of a comparative study of anti-money
laundering and combating the financing of terrorism (AML/CFT)
regimes and adding new members, including Iraq. The second
plenary will be held in Beirut September 2005. End summary.


2. (U) On April 11-14, 2005 the first plenary of the MENA
FATF was held in Manama, Bahrain. The MENA FATF is a FATF
styled regional body (FSRB) that promotes international
AML/CFT standards. Delegates from finance ministries,
central banks, and law enforcement agencies represented the
14 member countries: Morocco, Algeria, Tunisia, Egypt, Yemen,
Saudi Arabia, Jordan, Lebanon, Syria, Bahrain, the UAE,
Qatar, Kuwait, and Oman. Member countries sent delegates at
the undersecretary, assistant secretary, and director levels,
which appropriately allowed for a more detailed working-level
environment. The United States and the UK attended as
observer countries. Deputy Assistant Secretary for Terrorist
Financing and Financial Crimes, Daniel L. Glaser, led the
U.S. delegation. Mr. Glaser was also accompanied at the
plenary meeting by a US delegation, which included Gary
Peters, State INL, Jason Herring, FBI, Ahmed Elbashari,
FinCEN, and Rachel Lebenson, Treasury. (Note. France is also
a MENA FATF observer country but did not send any
representatives to the plenary. Endnote). The World Bank,
the International Monetary Fund (IMF),the GCC, FATF, the
United Nations Office on Drugs and Crime (UNODC),and the
Egmont Group also attended as official observers to MENA FATF.

Official and Unofficial Leadership at the Plenary


3. (SBU) The plenary was chaired by Mohammed Baasiri of
Lebanon, President of the MENA FATF, Vice President Mahmoud
Abdel Latif from Egypt and Executive Secretary Adel Hamad Al
Qulish from Saudi Arabia. Baasiri led the plenary adeptly,
contributing instructive comments based on his role in
constructing Lebanon,s AML/CFT regime. Representatives from
Kuwait and the UAE played leading roles throughout the
plenary, which was characterized by general enthusiasm and
engagement among the participants. Yaqoub Al-Ebrahim,
Manager of Supervision at the Central Bank of Kuwait,
delivered a presentation outlining Kuwait,s administrative
and legal procedures for overseeing charities. He also
supported the role of international observers in the MENA
FATF working groups given their expertise and experience,
despite the concerns of several participants (notably Saudi
Arabia and Syria) who challenged the intrusiveness and value
of international observers. Kuwait volunteered to chair the
Mutual Evaluations Working group and is participating in two
of the three ad hoc committees.

4. (SBU) The UAE representatives similarly took on a
leadership role. Led by Abdulrahim Mohamed al Awadi,
Assistant Executive Director of AML at the Central Bank of
the UAE, the UAE delegation asserted that the MENA FATF
should aggressively tackle issues such as encouraging its
members to ratify and implement the UN conventions on
terrorism and terrorist financing, and drafting AML/CFT laws
among the member states. The UAE has also volunteered to
chair the Typologies Working Group and is participating in
all three of the ad hoc committees. On several occasions,
the UAE offered to provide training and technical assistance
to other MENA FATF members, or to serve as a host for
regional training.

Working Groups and Other Business


5. (U) By the second day, two working groups and three ad
hoc groups were formed to handle more specific work of the
MENA FATF. The Mutual Evaluation Working Group, chaired by
Kuwait, includes Tunisia, Algeria, Saudi Arabia, Syria, and
Egypt. The Training and Typology Working Group, chaired by
the UAE, includes Bahrain, Lebanon, Morocco and Yemen.
Additionally, three ad hoc groups were formed to address the
issues of cash couriers (UAE, Qatar, Kuwait),charities (UAE,
Saudi Arabia, Kuwait, Egypt),and hawalas (Jordan, UAE,
Algeria, Egypt). Observers from the IMF, World Bank, and
FATF will participate in the working groups.


6. (SBU) After some debate the Plenary also chose an
external auditor and approved the budget. During a
discussion on choosing an outside auditor, Kuwait encouraged
using an auditor of global renown. However, the plenary
ultimately decided to appoint the Bahrain based accounting
firm BDO Jawad Habib. The plenary also approved the budget
(which is funded up to $500,000 each year for the first five
years by Bahrain) and agreed to provide recommendations to
the Secretariat for additional funding by the members.


7. (SBU) The membership also discussed the distribution of
a comparative survey of AML/CFT regimes in the region. There
was some disagreement about the nature of such a resource and
whether or not it would be used as a benchmark for
evaluation. MENA FATF members were concerned that they would
have no input on this study or that this was a final report.
Baasiri noted that this was simply a baseline document to see
where the member states currently stand. He urged the
members to provide corrections to allow the Secretariat to
translate the document before the end of April 2005.

Possible New Members


8. (U) Baasiri noted that he had had inquiries from Iraq,
Libya, Sudan, Mauritania, and Djibouti to become new members
of the MENA FATF. The plenary decided that the Secretariat
could send these countries letters advising them of the
conditions for requesting membership including the MENA FATF
MOU. However, the letter must be clear that it is not an
"invitation" to join MENA FATF. (Note. According to the MOU
a country must request in writing to become a member and the
membership must be approved unanimously by the MENA FATF
membership. Endnote). Japan and Spain have also requested to
be included as observer countries.
The Politics of Language and Identity


9. (SBU) The plenary, at times, provided a forum for
national and regional politics. Egypt and Saudi Arabia
implored all members to speak Arabic as an indication of the
plenary,s Arabic identity. However, the UAE and Bahrain
spoke almost exclusively in English, while the North African
countries spoke in French. Saudi Arabia was adamant about
the minimal role of observers. The Saudi delegate reiterated
several times the "independent character" of the MENA FATF,
which should be respected by minimizing the role of outside
observers. The President, Baasiri, and the representatives
from Bahrain, Kuwait, and the UAE as well as the observers
countries and institutions all stressed the importance of
working with the observers who bring the expertise and
knowledge of what an FSRB needs to do.

A successful first Plenary


10. (SBU) Baasiri concluded the plenary by urging member
countries to exercise political will. He stated that
developing institutions alone would not suffice in creating
tenable AML/CFT regimes but that strong commitments from each
country,s senior leadership is also necessary. Glaser noted
that, the MENA FATF, though still in its infancy was already
ahead of other FSRBs given the level of engagement displayed
at the first plenary session. Glaser advised that the
plenary should consider acting as a body to develop strategy
and oversight without micromanaging everything that the
Secretariat does. Both Glaser and the representative from

SIPDIS
FATF conveyed that the purpose of the MENA FATF was to adopt
regional solutions to these issues based on the accepted
international standards, as set forth by global FATF.

World Bank and IMF Seminars on AML/CFT


11. (U) Following two days of plenary sessions, the World
Bank and IMF held two days of seminars addressing key AML/CFT
topics. Kuwait and Saudi Arabia made valuable presentations
on the structure of their respective charitable oversight
mechanisms. Lebanon presented the foundation of its
successful AML/CFT regime, and the UAE gave a presentation on
the scope of its AML/CFT regime.

The Second Plenary


12. (U) The second MENA FATF Plenary is scheduled for
September 2005 in Beirut, Lebanon. As part of that plenary,
observer institutions will train MENA FATF members on doing
AML/CFT mutual evaluations.
MONROE