TREASURY UNDER SECRETARY LEVEY DISCUSSES TERRORIST

C O N F I D E N T I A L SECTION 01 OF 04 KUWAIT 001687 SIPDIS SIPDIS STATE FOR NEA/ARP, EB FOR JSALOOM AND DAVID NELSON, TREASURY FOR U/S LEVEY, NSC FOR JUAN ZARATE E.O. 12958: DECL: 04/30/2016 TAGS: EFIN PGOV PTER PREL KTFN KU SUBJECT: TREASURY UNDER SECRETARY LEVEY DISCUSSES TERRORIST FINANCING PRIORITIES WITH GOK OFFICIALS REF: A. STATE 28021 ¶B. STATE 25359 Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d) ¶1. (C) Summary: During separate April 29 meetings with senior GOK officials, Treasury Under Secretary Stuart Levey praised the USG's strong alliance with Kuwait; called for a law criminalizing terrorist financing to bolster the GOK's steadfast CT support and address existing legal gaps; encouraged enactment of a cash exit declaration policy to counter cash couriers; urged greater GOK scrutiny of RIHS operations, including the charity's branches abroad (Albania, Bosnia, Bangladesh) suspected of financing terrorism; urged the GOK to consider co-sponsoring a UN designation of Kuwaiti terrorist financiers Jaber Jalahmah, Mubarak Mishkhis Sanad Al-Bathali, and Hamid Al-Ali; U/S Levey passed both the RIHS and Jalameh, Bathali and al-Ali non-papers to the Foreign, Finance and Social Affairs Ministers, and to the Deputy Central Bank Governor; and updated the Foreign and Finance Ministers on a proposed USG financial strategy to counter Iran's growing defiance (septel). ¶2. (C) On April 29, Treasury Undersecretary for Terrorism and Financial Crimes Stuart Levey met separately with Deputy Prime Minister and Foreign Minister Shaykh Dr. Mohammed Al-Sabah, Finance Minister Bader Al-Humaidhi, Social Affairs and Labor Minister Shaykh Ali Jarrah Al-Sabah, Director General of Kuwait Customs Ibrahim Al-Ghanim, and Deputy Governor of the Central Bank Dr. Nabeel Al-Mannae to discuss Kuwait's ongoing efforts to combat terrorist financing. ¶3. (C) The GOK officials reaffirmed their commitment to the war on terror; highlighted ongoing GOK efforts to revise the GOK's 2002 AML law to criminalize terrorist financing and strengthen the Financial Intelligence Unit (FIU); welcomed continued dialogue and cooperation with the USG on combating terrorist financing and anti-money laundering (CTF/AML); acknowledged GOK delays in implementing inbound cash declaration policies; remained skeptical about enacting a cash exit declaration policy; offered to investigate allegations of terrorist financing against the Kuwait-based charity Revival of the Islamic Heritage Society (RIHS) (ref B); and concurred with the threat posed by terrorist financiers Jalahmah, Al-Bathali, and Al-Ali (ref A),but said they would need to get back to USG officials on co-sponsoring a UN designation of the three individuals. End Summary. TF Law Long Overdue -------------- ¶4. (C) U/S Levey praised the GOK's strong support for the war on terror but pointed to existing legal gaps in the country's CTF/AML regime, most notably the lack of a law criminalizing terrorist financing, that undermined the country's otherwise steadfast CT commitments. Finance Minister Bader Al-Humaidhi acknowledged GOK procedural delays on a new TF law but pointed to ongoing efforts to draft a new TF law by the GOK inter-ministerial National Committee to Combat Money Laundering and Terrorist Financing (NC),chaired by the Central Bank (CBK) Governor. ¶5. (C) Deputy Central Bank Governor Dr. Nabeel Al-Mannae voiced similar concerns about existing GOK CTF/AML institutional weaknesses, including an FIU hampered by its exclusion from the Egmont Group due to GOK restrictions on the sharing of financial information. Al-Mannae added that the draft TF law was now complete and pending a final review by the Public Prosecutor's Office (PPO) before final NC approval later this month. The NC's approval would open the way for Cabinet and Parliamentary consideration and adoption. The CBK would push for Cabinet and Parliamentary approval before the summer recess, he underscored. Finance Minister Al-Humaidhi was less optimistic about Parliamentary approval until after the summer break. (NOTE: In April 2005, GOK officials provided a similar update on GOK progress in passing a CTF law in Kuwait to Treasury DAS Glaser.) ¶6. (C) Kuwait Customs Director General Ibrahim Al-Ghanim pointed to ongoing efforts by his agency to improve coordination and dialogue with other GOK CTF/AML entities at KUWAIT 00001687 002 OF 004 the PPO, CBK, and the Ministries of Interior and Commerce/Industry. Kuwait Customs was also conducting seminars and conferences to learn more about CTF/AML policies and procedures, he added. He welcomed increased USG technical assistance and underscored repeatedly the critical importance of timely information and analysis to target Kuwait Customs' efforts against terrorist financiers and smugglers. These and other issues were also being discussed with GCC Customs counterparts to improve coordination, he noted. ¶7. (C) Al-Mannae expressed CBK dissatisfaction with the Council of Minister's decision to house the FIU in the CBK, pointing out that the CBK preferred housing the FIU in the PPO or another GOK legal entity. He added that the new draft law would rectify the FIU's existing shortfalls, including the lack of Egmont Group membership, in order to enhance GOK access to timely information and strengthen its CTF/AML regime. He confirmed that the law would criminalize terrorist financing. He said the draft had been reviewed by the IMF. Al-Ghanim also explained that Kuwait Customs was interested in assigning one of its officials to the FIU in an effort to enhance Kuwait Customs' role in the CTF/AML process and improve its access to information. Cash Inbound and Outbound Policies Needed -------------- ¶8. (C) U/S Levey pointed to increasing reliance upon cash couriers for the financing of terrorism and called on the GOK to implement existing inbound declaration policies and to enact a cash exit declaration policy, despite inherent cultural challenges posed by the country's cash-reliant traditions. Al-Humaidhi agreed that inbound policies were not being implemented effectively but voiced skepticism about the possibility of a cash exit declaration policy, adding that he was not aware of a similar requirement in the U.S. ¶9. (C) Customs DG Al-Ghanim apologized for the delay in printing cash inbound declaration forms, noting that Kuwait Customs was working closely with the Finance Ministry to resolve the problem. U/S Levey allayed Finance Ministry concerns that increased cash controls ran counter to a free market economy, explaining that possessing cash was not the issue at hand, but rather the lack of effective tracking and declarations aimed at identifying possible misuse of funds or revealing leads by failure to report. He encouraged Al-Ghanim to consider targeted cash outbound enforcement at border posts or select flights heading to countries of concern as an important first step in tracking cash outflows. (NOTE: After the Kuwait Customs luncheon, the DHS/ICE official informed Treasury that the forms should have been printed 9 months ago. Due to the printing delay, he added that he is working with the GOK to now print both in and outbound customs declaration forms. Vigilance Toward Charities and Terrorist Financiers -------------- -------------- ¶10. (C) U/S Levey underscored the importance of increased GOK vigilance toward Kuwaiti charities and individuals suspected of ties to terrorism, pointing out that Kuwait's own international reputation was threatened by such organizations and entities. Social Affairs and Labor Minister Shaykh Ali Jarrah Al-Sabah pointed to improved controls over charities' activities, including the appointment of a new audit firm to monitor charities' accounts and the fact that all overseas funds transfers are channeled through one GOK-regulated bank account, as part of the GOK's continued effort to address this important issue. ¶11. (C) Ministry of Social Affairs and Labor Charities Oversight Director Nasser Al-Amar provided an overview of his office's efforts, including closures of kiosks and charity branch bank accounts, as part of the GOK's improved effort to enhance its oversight of charities. When asked if the Ministry had checked up on RIHS activities in Albania, Bosnia or Bangladesh, Al-Amar responded that Ministry of Social Affairs coordinates with the Foreign Ministry on such issues. U/S Levey warned of the difficulty in identifying TF problems by simply reviewing financial records produced by a suspect NGO, and encouraged reaching out to security services and host governments for additional information when KUWAIT 00001687 003 OF 004 investigating suspected TF activities. U/S Levey acknowledged improved GOK regulations and urged increased information sharing among GOK agencies including Kuwait State Security and the Ministry. Shaykh Ali added that "we are doing our best" to address the challenges. Revival of the Islamic Heritage Society (RIHS) -------------- - ¶12. (C) U/S Levey passed copies of two USG briefing papers on RIHS branches in Bosnia, Bangladesh, and Albania and on Kuwaiti terrorist financiers Jalahmah, Bathali, and Al-Ali and urged timely GOK action to address USG concerns based on the papers' substantial incriminating evidence. GOK interlocutors, most notably Deputy Prime Minister and Foreign Minister Shaykh Dr. Mohammed Al-Sabah, acknowledged the USG's rationale for GOK action and welcomed the USG's willingness to share information. ¶13. (C) Regarding RIHS, U/S Levey voiced USG concern with RIHS operations overseas, pointing to the 2002 designations of RIHS offices in Pakistan and Afghanistan and the sustained trend of RIHS support to terrorist organizations through other branch offices. U/S Levey highlighted disruptive measures taken by local authorities in Albania, Bosnia and Bangladesh in response to suspected RIHS terrorist support activities. U/S Levey stressed that GOK vigilance on confronting terrorist threats within Kuwait needs to be extended to address Kuwait-based individuals and organizations supporting terrorism abroad. With numerous overseas branches of RIHS suspected of supporting terrorist networks, U/S Levey stated that RIHS was like a tree bearing poisonous fruit, a problem that must be addressed at its roots, i.e. at its headquarters in Kuwait. He encouraged increased GOK information sharing, vigilance and scrutiny of RIHS headquarters in Kuwait and its branches abroad to address the concerns outlined in the paper and to protect Kuwait's international reputation in the war on terror. ¶14. (C) Dr. Mohammed asked whether Kuwait had been the sole source of RIHS funds abroad. U/S Levey noted that the substantial majority of the funds originated from RIHS headquarters in Kuwait. Dr. Mohammed also stressed the importance of determining if RIHS authorities in Kuwait were complicit in any way. He promised to investigate the allegations to determine if the charity had indeed violated Kuwaiti laws. U/S Levey noted to the Foreign Minister that UN designations can be an effective option in cases where domestic laws cannot be successfully applied to disrupt a suspected terrorist support network. He stressed the importance of public accountability for terrorist financiers in demonstrating Kuwait,s commitment to stopping Kuwait-based entities from facilitating terrorism abroad. ¶15. (C) Social Affairs and Labor Minister Shaykh Ali concurred with the importance of protecting Kuwait's reputation abroad and agreed to review the paper closely and respond accordingly, noting that his ministry coordinates charity oversight abroad through the MFA and GOK Embassies. Shaykh Ali did comment that though the GOK does check up on projects outside of Kuwait, it is a possibility that there are "too many transfers (funds) and too many projects overseas" for the MSA and MFA to deal with. Information sharing, especially input from the GOK security services and other interagency departments, added Levey, is imperative for effective oversight. U/S Levey stated that the Albania, Bosnia and Bangladesh branches of RIHS are worthy of adding to the UN 1267 list, noting that it would send a powerful statement if the U.S. and Kuwait went to the UN together on this issue. Jalahmah, Bathali and Al-Ali -------------- ¶16. (C) Regarding Kuwaiti terrorist financiers Jalahmah, Al-Bathali, and Al-Ali, U/S Levey pointed to failed GOK attempts to prosecute the individuals because of non-existent terrorist financing and conspiracy laws. U/S Levey explained that a UN designation was the best alternative to a criminal prosecution and urged the GOK to consider co-sponsoring a UN designation of the three individuals. A joint U.S.-Kuwait designation would demonstrate Kuwait's resolve in holding these individuals KUWAIT 00001687 004 OF 004 accountable, U/S Levey stressed. ¶17. (C) Dr. Mohammed agreed that the individuals in question were "bad characters," especially Hamid Al-Ali whom he described as the "most dangerous." He offered to follow-up with the Minister of Interior and said that he would get back to USG officials on co-sponsoring a UN designation, offering to discuss the matter further with the Prime Minister. ¶18. (U) U/S Levey has cleared this message. ******************************************** For more Embassy Kuwait reporting, see: http://www.state.sgov.gov/p/nea/kuwait/?cable s Or Visit Embassy Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ ******************************************** LEBARON