UAE PREPARED TO DISCUSS CHARITIES AT MENA-FATF

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 001006

SIPDIS

STATE FOR EB/ESC/TFS JSALOOM, NEA/ARPI TREUTER
TREASURY FOR DGLASER, RLEBENSON
MANAMA FOR JBEAL

E.O. 12958: DECL: 03/14/2016
TAGS: PTER KTFN AE UAE
SUBJECT: UAE PREPARED TO DISCUSS CHARITIES AT MENA-FATF

REF: A. STATE 37310


B. 2005 ABU DHABI 2741

C. ABU DHABI 409

D. ABU DHABI 988

Classified By: Ambassador Michele J. Sison for reasons 1.4 b and d.


1. (C) The UAE Central Bank will represent the UAE at the
March 20-21 MENA-FATF plenary in Cairo, and Central Bank
officials are prepared to discuss the UAE's implementation of
the MENA-FATF charities white paper. This discussion will
likely focus on the same themes that Abdulrahim al-Awadi, the
Executive Director of the UAE's Anti-Money Laundering and
Suspicious Cases Unit (AMLSCU),presented during last year's
MENA-FATF plenary in Bahrain. Al-Awadi told Econoff March 15
that the UAE's laws and regulations governing charitable
activities are "in-line" with the MENA-FATF charities white
paper. He noted that when a charity opens a bank account, it
is required to produce an original copy of the charity's
license, which must be signed by the Minister of Social
Affairs. He also said that charities are only allowed to
open one bank account.


2. (C) The UAE Ministry of Social Affairs is responsible for
licensing and monitoring all charitable activities in Abu
Dhabi and the northern Emirates; the Dubai Department of
Islamic Affairs and Charitable Activities licenses and
monitors Dubai's charities, but the Central Bank did not ask
representatives from either of these entities to attend the
MENA-FATF plenary. On March 13, Ministry of Social Affairs
Under Secretary Hassan al-Sheikh told Econoff that he would
contact al-Awadi to see if the Central Bank needed any input
from him to prepare for the charities discussion.


3. (C) Although the most appropriate body to discuss UAE
charity regulation (the Ministry of Social Affairs) will not
be in attendance at the MENA-FATF Plenary, Embassy suggests
the U.S. delegation raise the following points with the
Central Bank, since it should play a more active role in
charity oversight.

-- When examining financial institutions, the Central Bank
should look at charity transactions as a separate category of
transactions. Charities are required to provide their bank
account information to the Ministry of Social Affairs, but
Ministry officials have told us that it is up to the Central
Bank to track a charity's transactions. However, Governor
al-Suwaidi told Econoff last year that he does not know
whether the bank's examiners are looking at charitable
transactions more stringently than any other bank transaction
(ref B).

-- If a charity opens more than one bank account, the Central
Bank should flag it to the Ministry of Social Affairs.
Although the 1974 law governing UAE charity organizations
states that charities are only allowed to open one bank
account, officials from several charities have told econoff
anecdotally that they have more than one account. The
Central Bank should use its database system to see if
individual charities have multiple accounts at different
financial institutions.

-- If a charity directly transfers money abroad, the
financial institution should submit a suspicious transaction
report. In 1994 the UAE passed a resolution requiring
charities to transfer all overseas donations through the UAE
Red Crescent Society, and Ministry officials have told us
that they also allow charities to send funds through the
Sheikh Zayed Charitable and Humanitarian Foundation and the
Mohammed Bin Rashid Charitable and Humanitarian Foundation.
However, charities do not necessarily abide by this
requirement, and Embassy contacts at financial institutions
tell us they have received no written guidance from the
Central Bank to let the banks know that they should not allow
charities to transfer money abroad.


4. (C) Comment. The fact that the Central Bank did not reach
out to the charity regulators highlights Embassy's ongoing
concerns about the UAE's lack of working-level interagency
cooperation. One of the goals of the U.S./UAE Joint
Terrorist Finance Coordination Committee (JTFCC),which first
met on January 24, 2006 (ref C),is to create a vehicle to
enhance communication and cooperation among the various UAE
agencies involved in counter-terror finance efforts. Better
enforcement of charity regulations is one of the topics that
will be discussed at the upcoming May JTFCC meeting (ref D).
The Central Bank's attitude about charity regulation mirrors
its attitude about other aspects of the UAE's anti-money
laundering and counter-terror financing efforts: if a
regulation has been passed, then they think they have done
enough. The Emiratis seem to believe that having a
regulation actually prevents the illegal activity. Embassy
officers and Washington visitors have pressed Central Bank
officials multiple times to acknowledge that just having a
law is not sufficient. They must enforce the law as well --
which requires broader interagency cooperation and
engagement. For a comprehensive assessment of the UAE
charity regulatory regime -- and its gaps -- see ref B.
SISON