ARGENTINE SENATE PASSES COUNTER-TERRORISM FINANCE

C O N F I D E N T I A L BUENOS AIRES 001125

SIPDIS

SIPDIS

PASS NSC FOR JOSE CARDENAS, ROD HUNTER
STATE FOR S/CT -- NOYES
STATE FOR EB/ESC -- DAS SIMONS AND JEAN CLARK
STATE FOR EB/ESC/TFS - LEANNE CANNON
STATE FOR INL/C/CP (PETERSON),INR/EC, S//CT (HILL),IO/PSC
(SANDAGE)
TREASURY FOR TFFS (HEFFERNAN, VANLINGEN),OFAC, FINCEN
DHS FOR ICE -- D.THOMPSON
JUSTICE FOR OIA AND AFMLS
PARIS PASS US MISSION OECD

E.O. 12958: DECL: 06/06/2017
TAGS: KTFN EFIN PTER SNAR ETTC PREL AR
SUBJECT: ARGENTINE SENATE PASSES COUNTER-TERRORISM FINANCE
BILL, BUT GOA WORRIED ABOUT POSSIBLE FATF SANCTIONS

REF: A. BUENOS AIRES 907


B. BUENOS AIRES 78

C. BUENOS AIRES 794

D. BUENOS AIRES 803

E. BUENOS AIRES 855

F. BUENOS AIRES 881

Classified By: Charge Michael Matera For Reasons 1.4 (B and D).

Summary
--------------

1. (C) The Argentine Senate passed the draft anti-terror and
counter terrorism finance (CTF) bill on June 6. There are
positive indications that the lower house -- Chamber of
Deputies -- will consider the law soon, but it is unclear
whether it will be able to pass the bill prior to the
Financial Action Task Force's (FATF) June 25-59 plenary. MFA
Acting U/S of Bilateral Foreign Policy, Vicente Espeche Gil,
called in Charge June 4 to seek U.S. support in avoiding FATF
sanctions if Argentina fails to get full Congressional
passage of the law prior to the plenary. He emhasized the
GoA's commitment to combating terrorism and terrorism
financing, but noted that election year pressures were likely
to slow final Congressional consideration of the bill.
Espeche Gil argued that sanctions would be unjust and would
have negative consequences for Argentina. He said they would
also be counterproductive to achieving the long-term goal of
strengthening the GoA's capacity to combat terrorism. Given
positive momentum, Post supports the GoA's request for more
time -- if necessary. End Summary.

Senate Overwhelmingly Approves Draft CTF Law
--------------

2. (C) On June 6, the Argentine Senate finally passed draft
counter-terror and CTF legislation that President Kirchner
had submitted to Congress on December 20, 2006 (see reftels
for background). A few opposition Senators raised minor
concerns about the law's definition of terrorism, but in the
end it received almost unanimous support, with a vote of 51
Senators in favor and only one against. The law now passes
to the Chamber of Deputies. Until yesterday, the consensus
opinion among Post's GoA and Congressional contacts has been
that the Chamber would not be able to pass the law before the
June 25-29 FATF Plenary in Paris. (Note: at the February
plenary, FATF member countries urged the GoA to push the bill
through Congress by the next plenary, or face possible
sanctions. This would likely take the form of a public
statement that Argentina is not in compliance with
international standards. End Note)

Momentum Building in Chamber of Deputies
--------------

3. (C) Post's contacts in Congress note that pressure seems
to be building to expedite the draft law through the Chamber
of Deputies. The Chamber's Penal Committee was called to a
meeting on June 6 to analyze the draft law, even before the
Senate had approved it. The Director of Labor Legislativa, a
private firm that follows events in Congress, sees this as an
indication of the GoA's increasing effort to get the law
passed. The GoA's National Coordinator for anti-money
laundering and counter-terrorism finance, Juan Felix Marteau,
informed Econoff June 7 that opposition parties in the
Chamber have raised some objections to the bill.
Nevertheless, there now appears to be an outside chance that
the bill will go to the full floor of the Chamber the week of
June 18 (Note: the Chamber is only working every other week
due to the coming elections, and is closed the week of June
11). As another sign of GoA interest, the financial daily
"Ambito Financiero" reported that Economy Minister Felisa
Miceli contacted the Chamber late on June 6, after the Senate
approval, and urged an immediate vote. The various press

reports on the Senate action all point to the threat of FATF
sanctions as driving both the GoA and Congress.

MFA Appeals for More Time to Pass CTF Law
--------------

4. (C) The MFA's Ambassador Espeche Gil called in Charge June
4 to express the GoA's rising concern that the FATF would
seek to sanction Argentina if the full Congress did not pass
the legislation on time. He said it was a matter of months,
at most, before the full Congress would pass the law, and
argued that the main reason for delay was that most Members
of Congress were out campaigning (in preparation for October
elections). This had complicated Congressional leaders
efforts to form the necessary quorums to debate and pass the
legislation.


5. (C) Espeche Gil stated that imposing sanctions would be an
unjust decision and requested U.S. support at the FATF
meeting to allow Argentina more time. He said sanctions
would have a detrimental impact on Argentina's financial
system, and argued that they would actually be
counterproductive to the goal of ensuring a legal framework
in Argentina that criminalizes both acts of terror and
financing of terrorism.


6. (C) He argued that the GoA's commitment to fighting
terrorism was beyond question, and emphasized the extensive
coordination on such issues between Argentine and U.S. law
enforcement agencies. Therefore, he noted, any delay in
passage of the law was not an indication of lack of political
will on the subject. He further noted that the Penal Code
gave GoA law enforcement agencies sufficient legal authority
to investigate and try crimes related to acts of terror and
terrorism financing, so the delay would not create
vulnerabilities or weaknesses in the legal system.


7. (C) He called the draft CTF law a means to perfect and
improve the current Penal Code, but argued that it was a
complex issue and constituted major legal reform. It,
therefore, required careful analysis and should not be
rushed. (Comment: Post argued in Refs A and B that the main
benefits of the CTF law were to send a signal of GoA
seriousness in fighting acts of terror and terrorism
financing, and to provide the legal foundation for the
Argentine Central Bank and Financial Investigative Unit's
administrative measures. End Comment)


8. (C) Espeche Gil said he would consider raising the issue
with other Embassies, i.e., Germany, Canada, France.
However, he considered it most important to seek U.S.
support, since the U.S. plays a dominant role in FATF
deliberations. Charge emphasized that it was extremely
important for Argentina to go to the FATF meeting with
evidence of both movement and continued GoA commitment to get
full passage ASAP.

Comment
--------------

9. (C) GoA and Congressional contacts appear uniformly
supportive of the law, and Post agrees that the bad timing --
with the GoA and Congress focused on October elections and
little else -- has been the main (albeit not the only) cause
for delay. Senate passage yesterday followed strong pressure
from several Ministries (and frequent Post advocacy). Until
today, Post's contacts thought that the best case scenario
was for the GoA to head to the end-June FATF meeting with
only Senate passage (as Post predicted in Ref A). Prospects
now seem slightly improved, although odds are that the GoA
delegation will head to Paris with the Chamber still
reviewing and debating the draft law.


10. (C) Nevertheless, Post argues that Senate passage of the
bill and building momentum in the Chamber are sufficient
indication of positive movement for the U.S. to support
giving Argentina more time. Post also agrees with Espeche
Gil that sanctioning Argentina following the FATF meeting
could prove counterproductive. As noted Ref B, President
Kirchner could possibly react by publicly rejecting the FATF
decision, using it as an election year foil to gain political
traction from a population that is suspicious of
international organizations. We note that FATF is perceived
here as a U.S.-led initiative, and any sanctions would likely
be perceived as directed by the U.S.


11. (C) Post also notes that Argentina's weakness on CTF,
money laundering, and other law enforcement matters is
implementation, not lack of legislation. At this stage,
sanctioning Argentina would not/not likely speed up passage
of the CTF legislation, and would distract attention from the
real priorities: judicial reform and improving the capacity
of law enforcement institutions (including Central Bank and
FIU). End Comment.






MATERA