COMBATTING PKK VIA STOPPING MONEY FLOWS

S E C R E T BAGHDAD 003934

SIPDIS

SIPDIS

DEPARTMENT FOR S/CT

E.O. 12958: DECL: 12/03/2022
TAGS: PTER ECON PREL TU IZ
SUBJECT: COMBATTING PKK VIA STOPPING MONEY FLOWS

Classified By: Deputy Political-Military Counselor Karen Sasahara for r
easons 1.4 (b) and (d)


1. (S) An analyst from the Iraq Threat Finance Cell (ITFC)
visited the Kurdistan Regional Government (KRG) last month to
see if there were any immediate steps we could encourage the
KRG to take against PKK/KGK financing in the wake of the
Turkey-PKK/KGK crisis, assisted by RRT Erbil. An S/CT-led
preliminary assessment team will visit Erbil December 8-14 to
take a deeper look and help refine future courses of action.
This cable details a preliminary assessment from the ITFC and
thoughts on training and intelligence gaps.


2. (S) The PKK/KGK is supported by financial flows from
Europe, Turkey, and the U.S. into both Turkey and northern
Iraq. The PKK/KGK purchased many weapons right after
Saddam's downfall in 2003, and continues to procure them from
a variety of sources. The KRG points to corrupt officers in
the Turkish Army itself as sources. There are intelligence
gaps regarding where the PKK/KGK is spending its money
(outside and inside Iraq). The KRG has sources inside the
PKK/KGK. The KRG has information about terrorist
organizations that they have not shared as of yet.


3. (S) Money-changers (hawala-like networks) and cash
couriers are the primary conduits for the movement of
currency. The banking sector would like to take advantage of
stricter regulation of the money-changers to gain entry into
the market. The KRG claim that there are no PKK/KGK-owned
bank accounts in the KRG. Bank accounts are held by some
businesses, but few individuals. The daily turnover of
currency through money-changers is estimated by bank
executives to be $20 million per day. KRG officials claim
that there is a KRG law enforcement presence at
money-changing locations. While money-changers must be
registered, their transactions are not. There are hundreds
of money-changers operating in defined locations.


4. (S) The legal framework to counter money-laundering in
Iraq relies on Coalition Provisional Authority Order 93, as
there are no relevant GOI or KRG laws. KRG law enforcement
officials indicated that they have not frozen or seized any
assets as part of their counter-terror effort, as they have
not received any direction from judicial authorities to do
so, a necessary precedent in their system. Seizure of assets
is only possible after a conviction. The Central Bank of
Iraq (CBI) branch in Erbil does not appear to receive
extensive oversight from CBI Baghdad, although currency does
move between the two.


5. (S) The KRG is critically short of training in
intelligence, law enforcement, border control, and customs
enforcement. The KRG would welcome assistance in these areas
as well as logistical and intelligence support which they
could use against the PKK/KGK and other terrorist groups.


6. (S) The visit of the S/CT assessment team will provide an
excellent opportunity to begin filling in the following
intelligence gaps:

--For what purposes do the PKK/KGK use their money inside
Iraq?

--Where does PKK/KGK money flow to once inside Iraq?

--How can we collect information on this flow?

--What training/equipment/assistance would be most useful to
KRG and GOI officials in assessing/interdicting this flow?
BUTENIS