TERRORIST FINANCE: CAIRO FOLLOW-UP ON ILLICIT CASH

C O N F I D E N T I A L CAIRO 003280 SIPDIS SIPDIS PASS TO JAY JALLORINA EEB/ESC/TFS E.O. 12958: DECL: 11/18/2017 TAGS: EFIN PREL PTER EG IS SUBJECT: TERRORIST FINANCE: CAIRO FOLLOW-UP ON ILLICIT CASH COURIERS REF: A. SECSTATE 152088 ¶B. CAIRO 000044 ¶C. CAIRO 007122 Classified By: Economic Counselor Catherine Hill-Herndon for reasons 1.4 (b) and (d). ¶1. (U) This cable responds to the request for more information regarding illicit cash couriers, as requested in REF A. Much of this information is included in the INCSR. ¶2. (U) The executive regulations of the AML law (from 2002) and the Banking Law (from 2003) address the issue of bulk cash smuggling. The threshold for declaring foreign currency at borders is $10,000 or the equivalent. All entering travelers are provided the declaration form, but anecdotal observation is that the implementation is inconsistent. The AML law states that without prejudice to the harsher penalties mentioned in any other law, the penalty for the commission or the attempt to commit the crime of money laundering is imprisonment for up to seven years and a fine amounting to up to twice the money subject of the crime. If a traveler is caught by GOE officials in possession of cash or negotiable instruments over $10,000 which have not been declared, the authorities can seize those funds. ¶3. (U) Regarding interdicting potential cash couriers, Egypt relies on its Customs Authority to collect the declaration forms, conduct random searches, and be aware of any suspicious activities. We are not aware of any ongoing investigations into bulk cash smuggling, or any recent prosecutions under existing laws. ¶4. (U) In addition to raising the issue of illicit cash couriers with multiple government authorities, in coordination with the Department of Homeland Security, the Embassy is planning a bulk cash courier training course for up to 35 Egyptian officials later this year or early next year. In addition, U.S. Treasury has been in discussion with the Middle East and North Africa Financial Action Task Force (MENA-FATF) regarding training for all MENA countries on this issue in Jordan in March 2008. ¶5. (C) The Embassy has discussed the issue of illicit cash couriers with officials in the ministries of Foreign Affairs and Finance, the Central Bank's Money Laundering Combating Unit, and the Customs Authority. In particular, we have discussed at length the issue of Palestinian officials from Hamas carrying cash across the Egypt/Gaza border. When Econoffs visited the Rafah Border in May 2007, customs officials reiterated that all passengers at all ports of entry had to declare sums above $10,000. In the case of the Rafah crossing into Gaza, travelers carrying more than $10,000 into Egypt are not allowed to carry more than that amount when they return to Gaza, unless documentation can be provided that it was obtained legally. In response to specific cases at the Gaza border in December 2006 (REF B), the Customs Authority lowered the cash amount that must be declared from $20,000 to $10,000. The Customs Authority also issued a new declaration form that travelers must fill out and provide upon entry and exit from Egypt. ¶6. (C) Also in response to USG concerns over Hamas officials carrying large amounts of cash across the border into Gaza, GOE informed us earlier this year of new procedures they have implemented (REF C). These include requiring all travelers, not just Palestinian officials, carrying any amount of cash over that deemed necessary for "personal use," (in practice, $1,000) must deposit the cash in a bank in Egypt and transfer it to a bank in Palestine. Once deposited into a bank, the cash becomes subject to Egypt's money laundering laws, which allow for the MLCU to investigate the origin and intended destination of the funds. (Note: These procedures, however, were not mentioned when Embassy staff discussed the issue with Customs officials at the Rafah crossing in May.) Given the political and security events in Gaza this year, the Rafah border has not been open for some time, and even when it was open it was only for short times, so the number of travelers crossing is very low. That said, to our knowledge, since Prime Minister Haniyeh attempted to cross with USD 32 million in December 2006, we are not aware of any other such instances (REF B). ¶7. (U) The GOE is in the process of replacing its original counterterrorism law, an emergency law enacted in 1981, with a new and updated law. It will reportedly include some specific measures against terrorist financing. RICCIARDONE