DRAFT UAE-U.S. "GAP ANALYSIS" OF CASH COURIER REGULATIONS

UNCLAS SECTION 01 OF 03 ABU DHABI 003872 SIPDIS DEPT FOR NEA/ARP, EB/ESC/TFS TREASURY FOR A/S O'BRIEN, PHEFFERNAN, ACURTIS DHS FOR DHS/ICE, FINANCIAL AND TRADE INVESTIGATIONS NSC FOR JZARATE SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PTER KTFN AE SUBJECT: DRAFT UAE-U.S. "GAP ANALYSIS" OF CASH COURIER REGULATIONS Refs: A) Abu Dhabi 3818, B) Abu Dhabi 2421, C) 2003 Abu Dhabi 2211 ¶1. (U) In response to the Central Bank Governor's request at the September 12 JTFCC for a "gap analysis" of the U.S. and UAE cash reporting regulations and procedures, Embassy/CG interagency team (State/Econ, Treasury/OFAC, DHS/ICE) prepared the following draft and passed to the UAE Central Bank for comment on September 26. The initial response from the Central Bank was positive, with no comments. We are trying to clarify whether Central Bank officials have passed the analysis to the Governor. In conducting the analysis, we noted two gaps between our respective regulations: One, UAE regulations do not provide for cash declarations departing the country; two, UAE regulations only cover cash and travelers checks, not all bearer negotiable monetary instruments. Central Bank officials noted that the UAE does not have the broad range of negotiable monetary instruments that the U.S. does. Begin Text of Gap Analysis and Best Practices U.S. - UAE Cash Courier Gap Analysis of Regulations -------------- -------------- U.S. Law and Regulations (PL 97-258, 31 USC 5311, et sec as amended) -------------- -------------- -- Import and export of any amount of currency permitted. -- Must declare currency and monetary instruments transported in and out of U.S. in excess of $10,000 or foreign equivalent. UAE Law and Regulations (Under Provisions of Federal Law No. (4) of 2002) -------------- -------------- -- Import and export of any amount of currency permitted. -- 40,000 Dirham's (or equivalent) must be declared on importation. (cash and travelers checks) -- No requirement to declare on export Gaps in Regulations -------------- -- Current regulations do not require travelers to declare currency or monetary instruments on departure from UAE. -- UAE regulations cover cash and travelers checks. U.S. regulations cover bearer negotiable instruments (for example: cash, travelers checks, bearer bonds, 3rd party endorsed checks, etc.) Implementation -------------- -- It is premature to provide an assessment of potential gaps in implementation of cash courier regulations prior to engaging in the proposed cash courier operation. Best Practices Per FATF Special Recommendation Number IX -------------- -------------- -- Countries should develop effective and feasible procedures to detect, stop, restrain, and where appropriate, confiscate such currency and bearer negotiable instruments. Countries are encouraged to coordinate these operations with all relevant law enforcement authorities. -- Countries are encouraged to base targeting efforts upon intelligence and analysis together with risk and threat assessments. Authorities must first identify travel routes, flights, ships and concealment methods that are considered high-risk because of known or possible links to terrorist financing or other illicit finance movement. -- Most inspections, detections and seizures result from an initial "document review" process. -- Analysis of identification and travel documentation includes the following: passport, visa, airline/cruise ticket, and declaration or suspicious disclosure documentation. For cargo examinations, ensure that some or all of the following shipping documents are made available for review: manifest, airway bill, shipper's export declaration and invoice/packing list. -- When a false declaration or false disclosure occurs, or when there are reasonable grounds for suspicion of money laundering or terrorist financing, and if a person is unable to demonstrate the legitimate origin and destination of the currency or bearer ABU DHABI 00003872 002 OF 003 negotiable instruments, those funds may be stopped or restrained. Countries may consider confiscation of currency or bearer negotiable instruments without criminal conviction in a manner consistent with FATF Recommendation 3. -- Countries should consider establishing procedures to conduct thorough inspections of passengers, vehicles, cargo, etc. when it is suspected that currency and bearer negotiable instruments may be falsely declared or undisclosed or that it may be related to terrorist financing or money laundering. If possible, inspections should be conducted by a minimum of two individuals. As stated earlier, the use of X-ray equipment, scanners and canine units that are specially trained to sniff out currency should also be used to the maximum extent possible. -- Customs authorities and other enforcement agencies are encouraged to work with prosecutorial or judicial authorities to establish guidelines for the stopping or restraining of currency and bearer negotiable instruments, and the arrest and prosecution of individuals in cases involving falsely declared or disclosed currency and bearer negotiable instruments, or where there are suspicions that the currency or bearer negotiable instruments are related to terrorist financing or money laundering. -- These guidelines should also address individuals who fail to truthfully answer questions posed by customs officers or fail to co-operate with the authorities in the inspection process. -- Countries are encouraged to have co-operation arrangements with other countries which would allow for bilateral customs information exchanges between customs and other relevant agencies on cross-border reports, the stopping or restraining of cash and bearer negotiable instrument, and red flag indicators. This co-operation could also extend to operations involving controlled deliveries and other investigative techniques when unaccompanied cash and bearer negotiable instruments are detected at the border. -- Countries are also encouraged to enhance domestic law enforcement co-operation between customs, immigration and the police to respond to detections of currency and bearer negotiable instruments, and to develop intelligence. FIUs also have a useful role to play in the dissemination of this type of information domestically. Currency Reporting Requirements Per Customs and Border Protection Official Web Site -------------- -------------- It is legal to transport any amount of currency or other monetary instruments into or out of the United States. However, if you transport, attempt to transport, or cause to be transported currency or other monetary instruments in an aggregate amount exceeding $10,000 (or its foreign equivalent) at one time from the United States to any foreign place, or into the United States from any foreign place, you must file a report with U.S. Customs and Border Protection (CBP). This report is called the Report of International Transportation of Currency or Monetary Instruments, FinCEN Form 105 (http://www.fincen.gov/forms/fin105_cmir.pdf) . These forms can be obtained at all U.S. ports of entry and departure. You may continue to use a Customs Form 4790, the predecessor of FinCEN Form 105, to file the report until such forms are exhausted. In addition to the above requirement, if you as an individual or on behalf of an entity recognized as legal personalities (i.e. a company, corporation, partnership, etc.) sends, mails or ships monetary instruments to the United States from a foreign country valued at $10,000 or more, you are required to file a report with CBP before sending the monetary instruments to the recipient in the foreign country or in the United States. If you or a legal personality you are affiliated with in the United States receives monetary instruments valued at $10,000 or more, sent via mail, ship, or express courier, you are also required to report to CBP. You are required to file the report within 15 days upon receipt of the monetary instruments. The completed form should be sent to the following address: Commissioner of U.S. Customs and Border Protection Attention: Currency Transportation Reports Washington, DC 20229 Monetary instruments include: 1) U.S. or foreign coins and currency; 2) traveler checks in any form; 3) negotiable instruments (including checks, promissory notes, and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious ABU DHABI 00003872 003 OF 003 payee, or otherwise in such form that title thereto passes upon delivery; 4) incomplete instruments (including checks, promissory notes, and money orders) signed, but with they payee's name omitted; and 5) securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery. However, the term "monetary instruments" does not include: 1) checks or money orders made payable to the order of a named person which have not been endorsed or which bear restrictive endorsements; 2) warehouse receipts; or 3) bills of lading. Currency reporting is required under the Currency and Foreign Transaction Reporting Act (PL 97-258, 31 U.S.C. 5311, et seq.),as amended. Failure to comply can result in civil and criminal penalties and may lead to forfeiture of your monetary instrument(s). Sison