TERRORIST FINANCE: ENGAGING TEH GOI FURTHER ON TF

S E C R E T JAKARTA 000252

SIPDIS


E.O. 12958: DECL: 01/06/2016
TAGS: EFIN ETTC KTFN PREL AS ID
SUBJECT: TERRORIST FINANCE: ENGAGING TEH GOI FURTHER ON TF
IN ADVANCE OF PLANNED BA'ASYIR DESIGNATION

REF: SECSTATE 315

Classified By: Economic Officer Tobias Glucksman. Reason: 1.4 (b) and
(d).


1. (S) As requested reftel, Embassy Jakarta proposes the
following talking points for an initial approach to the
Government of Indonesia (GOI) on securing better
implementation of Indonesia's exiting UNSCR 1267 obligations.
We recommend the same approach this time as in the past,
i.e., a separate but coordinate demarche with Australia. We
also recommend that at an appropriate time soon we inform the
GOI of our intentions to proceed with designating all JI-4
instead of temporarily holding back Abu Bakar Ba'ashir's
(ABB) name. A more candid approach will help us convince the
GOI that we serve as a constructive partner on 1267
designations and actions to curb terrorist financing. This
will provide the GOI more time to consider ABB's designation
and whether the GOI should take the lead or co-sponsor the
designations. In the past, the GOI has respected the need to
protect information related to possible future designations.
That said, a leak about a possible ABB designation could turn
into a political football. We will need to use care when
providing GOI interlocutors pre-notification of a possible
ABB designation and stress the importance of guarding this
information closely.


2. (S) Although we have seen a growing public acceptance
Indonesia of the existence of terror links to radical Islam,
ABB retains a small but vocal following; some Muslim and
political leaders also question his role in JI and in the
terrorist attacks that have rocked Indonesia. Effectively
managing the public affairs aspects of this designation would
limit the potential negative spillovers that could impact
other key U.S. -- and GOI -- counterterrorism objectives. We
will draft contingency press points (septel) should a leak
occur.


3. (S) We support a UN lead and a low-key U.S. role in the
proposed workshop. While we see as important to remind the
GOI of its UN commitments, we do not recommend this as a key
focus of the workshop. The GOI knows its obligations, but
fails on implementation. We recommend, instead that regional
partners, such as Malaysia and Australia, provide briefs
early in the workshop on how they implement their UN
commitments. The Indonesians could follow with a similar
brief, which could lead to a constructive dialogue on how to
improve GOI processing of UN 1267 designations. We should
consult the GOI on the level of regional participation they
would find comfortable.


4. (S) We support providing GOI specific leads on 1267
violating accounts from prior designations, and encourage
sharing as much information as possible re such accounts.


5. (S) Begin Talking Points:

-- In the past, your government has expressed doubts about
the effectiveness of UNSCR 1267 designations of Indonesian
citizens. These doubts have drawn on two broad concerns:

(1) fear that certain domestic groups would portray the
designations as Western attempts to discredit Islam in
Indonesia and undermine your broader CT efforts;

(2) low technical capacity and the nature of terrorist
finance in Indonesia mean such designations seem unlikely to
produce the discovery and freezing of terror assets.

-- Over the past few years, your government has made
significant progress in its CT efforts. Investigations of
attacks in Bali, Jakarta and elsewhere have led to over 200
arrests and over 100 convictions.

-- National Police success in killing master bomb-maker
Azahari and the discovery of evidence linking his group's
activities to radical Islam have prompted prominent Islamic
leaders actively and publicly to denounce terrorism.

-- These impressive accomplishments, along with President
SBY's strong support for Indonesia's CT efforts, have
terrorists on the defensive. They have led to public
understanding of the nature of terrorism and encouraged
viewing terrorists as criminals. Robberies by terror groups,
such as the December 2005 jewelry store heist in Yogyakarta
that resulted in the shooting death of the owner and
employees, support depicting terrorists as criminals.

-- Given these positive developments, we remain interested in
working quietly to help you make the UN1267 designations
process more effective in Indonesia with the goal of curbing
the flow of financial resources to terror networks.


-- For now, terrorists in Indonesia use mostly cash and
couriers to fund activities and move assets within Indonesia
and across its borders, but that will not likely remain so in
the future. UN 1267 designations, therefore, have an
important role to play in broader CT efforts.

-- Wide publicity of UN designations could deter terrorists
from moving assets through your formal financial system.

-- An effective system for processing and implementing UN
1267 designations in the GOI and the financial system would
complicate and increase the costs of terrorists' activities
and help identify and freeze assets when terrorists do work
through Indonesia's financial institutions.

-- With the recent favorable shift in public perception of
terrorism and your CT efforts, we see an opportunity for the
GOI, by sponsoring or co-sponsoring names to the 1267
Committee, to take ownership of UN designations of those
responsible for terror in Indonesia.

-- Developing an effective system in Indonesia to process UN
1267 designations remains a challenge. Administrative
procedures and technical capacity shortfalls can produce long
delays in notifying some banks of new UN 1267 designations.
Many banks have limited capacity to search accounts and
report suspicious findings. We know that some UN 1267
designations contain insufficient or inaccurate information
that could result in the failure to identify assets or lead
to accusations against innocent Indonesians.

-- We would like to work with you and other CT partners to
understand better these challenges, help you overcome them
and build an improved system for implementing UN1267
designations and asset freezes.

-- We propose to work with you and other CT partners (e.g.,
the UN, Australia, and other regional partners) and hold a
workshop to discuss these issues with representatives from
key Indonesian institutions such as the Foreign Ministry,
Central Bank, the PPATK, banks and others.

-- We note that Indonesia's Financial Intelligence Unit
(PPATK) has made progress in this area. The PPATK has
underway a secure website that banks and other financial
institutions could check for updates to the UN 1267 list.
These institutions would then report suspicious findings.

-- The PPATK and other agencies seek to strengthen
Indonesia's anti-money laundering law. One proposed amendment
to the law would provide PPATK authority temporarily to
freeze assets. Such authority and the development of the
website could prove an important start towards improving GOI
processing of designations.

-- We want to explore what UN 1267 information seems most
useful and ways to improve your financial institutions'
capacity to search accounts and report suspicious findings.
Australia has technical expertise in this area.

-- We can work together so that Indonesia better meets its
commitments and makes effective use of the UN 1267 process.
AMSELEM