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