TERRORISM FINANCE: COMMENTS ON DRAFT PAPER ON

C O N F I D E N T I A L ISLAMABAD 018473 SIPDIS NOFORN SIPDIS FOR S/CT (ECROWE) E.O. 12958: DECL: 09/05/2016 TAGS: PK PREL KTFN PTER SUBJECT: TERRORISM FINANCE: COMMENTS ON DRAFT PAPER ON DISRUPTING EXTERNAL FINANCING TO THE TALIBAN REF: A) STATE 145269 B) GRENCIK-MAIER E-MAIL 09/18/06 Classified By: CDA Peter W. Bodde, Reasons 1.4 (b) and (d) ¶1. (S/NF) Embassy Islamabad provides the following comments and observations on the draft "Disrupting External Financing to the Taliban" paper. These comments are in addition to those forwarded to SCA/PB in Ref. B. ¶2. (S/NF) In "Introduction": Office of the Defense Representative Pakistan (ODRP) requests the removal of the term "tactical", which has a specific military meaning not apparently intended in this context. ¶3. (S/NF) Under "Taliban financing sources and streams": RAO and ODRP both question the accuracy of the statement "Intelligence reports, as well as diplomatic engagements with particular government interlocutors, also point to ongoing support from Pakistani Intelligence (ISID),though the nature and amount of this support and the degree to which it reflects official GOP policy, is not always clear." Post notes there is a difference between individuals associated with ISID and "Pakistani Intelligence." Additionally, post would be interested in more information on which specific "government interlocutors" have recently made these accusations. ¶4. (S/NF) ECON notes that, while the paper details Afghan government programs to combat terror financing, it does not mention Pakistan's draft Anti-Money Laundering bill, which could pass later this autumn, nor the GOP's work on a Charities Registration Act that would prevent charities from conducting cash to terrorist organizations. Additionally, the GOP is studying ways to regulate hawalas and cash couriers. ¶5. (S/NF) Diplomatic and public diplmacy elements of this policy: This is a difficult public diplomacy environment, so ample time to prepare for any new USG policies will be crucial. Public diplomacy should specifically target the financial services sector. ¶6. (S/NF) (Diplomatic elements continued): Post has worked hard in recent years to encourage AML and charity registration regulations. The problems encountered in enacting AML and other legisltation center on the Legislative Assembly's difficulty in passing meaningful, salutory laws on most topics, including these. We believe AML and related legislation will eventually pass, so it is important now to train civil servants and regulators who will have the necessary skills to enforce the regulations once they take effect. ¶7. (U) Post appreciates the opportunity to comment on this draft. CROCKER