TREASURY DELEGATION DISCUSSES NEW MONEY

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 001755 SIPDIS SIPDIS E.O. 12958: DECL: 10/03/2016 TAGS: ETTC EFIN PTER BA CTR ECTRD SUBJECT: TREASURY DELEGATION DISCUSSES NEW MONEY LAUNDERING/TERROR FINANCING LAW REF: A. MANAMA 1733 ¶B. MANAMA 1550 ¶C. MANAMA 1469 Classified By: Ambassador William T. Monroe for reasons 1.4 (b) and (d) . ¶1. (C) A Department of Treasury delegation led by Assistant Secretary for Terrorist Financing and Financial Crime Patrick SIPDIS O'Brien met with Justice Ministry Under Secretary Shaikh Khalid bin Ali Al Khalifa to discuss Bahrain's new anti-money laundering/combating the financing of terror (AML/CFT) law. Accompanying A/S O'Brien were the Ambassador, Treasury DAS for Intelligence and Analysis Levitt, Treasury Policy Advisor Hecht, and Pol/Econ Chief (notetaker). -------------- New Money Laundering/Terror Finance Law -------------- ¶2. (C) A/S O'Brien requested to meet with the Ministry of Justice to discuss the recent adoption of the GOB's new AML/CFT law and receive clarification regarding the law's "freedom fighter" carve out. (Note: The Treasury Department did not have a translation of the new law at the time of the meeting and thus limited the depth of the discussion.) Justice Under Secretary Shaikh Khalid told the delegation that getting the AML/CFT law passed by parliament had been a difficult task, but now that it was done, "we have gained a lot by this law" because it allows police and prosecutors to target money launderers and terrorist financiers (See Refs B and C). In response to A/S O'Brien's question, Shaikh Khalid said he was not happy about language that appears to exempt "freedom fighters" from the provisions of the law. Reading from the text, Shaikh Khalid said the article states "armed struggle against foreign occupation and aggression... for liberation or self-determination according to the principles of international law shall not be deemed a terrorist crime." He said that the parliament had inserted this language against the will of the government, commenting that it should be considered "political jargon" and not precise legal drafting. -------------- -------------- Freedom Fighter Exemption Superseded by Treaty Obligations -------------- -------------- ¶3. (C) According to Shaikh Khalid, the important phrase is, "according to the principles of international law." Additional Protocol No. 1 of the Geneva Convention and the UN Convention for the Suppression of the Financing of Terrorism, to which Bahrain is a party and which are considered to be part of Bahrain's domestic law, make clear that "freedom fighters" must protect civilian populations. Therefore, the only "freedom fighters" that would be exempt from the AML/CFT law are those that safeguard civilian populations. In Shaikh Khalid's view, there are no terrorist groups that meet this requirement, thus ensuring that the law applies to all terrorists. Although the article gives the appearance of granting a type of exemption, in reality it does not do so because of the reference to international law. ¶4. (C) A/S O'Brien noted that the "freedom fighter" exemption in the new law could be interpreted by the international community and Bahraini citizens as establishing a dissonance between what constitutes domestic activities versus transnational or international activities. Elaborating further, "We are concerned that this provision could hinder the GOB from dealing with external versus domestic terrorist financing," O'Brien said. To avoid nuanced arguments, a criminal statute requires explicit clarity for the citizenry to adhere to. Shaikh Khalid agreed with A/S O'Brien's assertion that the argument is nuanced and not everyone may agree, but indicated that the article had been necessary to ensure parliamentary approval. Terrorist financing is a transnational problem and A/S O'Brien cautioned that the "freedom fighter" exemption in the AML/CFT law may cause difficulties when the Financial Action Task Force (FATF) evaluates Bahrain's compliance with the FATF 40 Recommendations and Nine Special Recommendations on terrorist financing. ¶5. (C) With regard to AML legal actions, Shaikh Khalid said the Ministry of Justice had referred 4-5 cases to the public prosecutor, but he was unaware of any convictions. He noted that with Bahrain's increasing reliance upon the financial sector rather than petroleum for economic growth, it made sense to create special courts to deal with financial crimes cases. This was in his long-term plan, but could take up to MANAMA 00001755 002 OF 002 four years to implement. He said the AML/CFT law criminalizes non-declaration of cash by couriers, and it was the responsibility of the Ministry of Finance to set the limit above which cash must be declared. He said that non-declaration in and of itself is a crime. ¶6. (U) A/S O'Brien cleared this cable. ********************************************* ******** Visit Embassy Manama's Classified Website: http://www.state.sgov.gov/p/nea/manama/ ********************************************* ******** MONROE