PM FAYYAD DESCRIBES PA EFFORTS TO COMBAT MONEY

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 001994 SIPDIS SIPDIS NEA FOR FRONT OFFICE; NEA/IPA FOR WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS; TREASURY FOR SZUBIN/GRANT/HARRIS/HIRSON E.O. 12958: DECL: 09/24/17 TAGS: ECON EFIN KFTN EAID PREL PGOV KWBG IS SUBJECT: PM FAYYAD DESCRIBES PA EFFORTS TO COMBAT MONEY LAUNDERING AND TERROR FINANCING; WELCOMES USG SUPPORT REF: A. JERUSALEM 1910 ¶B. JERUSALEM 1719 ¶C. JERUSALEM 1820 JERUSALEM 00001994 001.2 OF 002 Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d). ¶1. (C) Summary: Prime Minister and Finance Minster Salam Fayyad recently told a Treasury Department delegation that the Palestinian Authority (PA) is committed to taking aggressive action against groups and individuals involved in terrorism financing. Fayyad urged the USG to pass him relevant information on individuals and groups of concern, particularly those affiliated with Hamas. He noted recent PA actions taken against 140 charities and the imminent enactment, by presidential decree, of anti-money laundering (AML) legislation as evidence of the PA's commitment to enforcement action. Fayyad insisted that the new AML law and existing regulations provide the tools necessary to take action against terrorism financing. He stressed the need for the PA to implement the AML decree and complete the process of building a Palestinian financial intelligence unit (FIU), rather than creating a mechanism for Israeli and Palestinian information sharing on AML and TF issues. Fayyad welcomed Treasury's offer to assist on combating trade-based money laundering (TBML). End summary. -------------- PA Making Progress -------------- ¶2. (C) In a September 11 meeting, Prime Minister Fayyad told a Treasury Department delegation led by Deputy Assistant Secretary Daniel Glaser that he eagerly welcomes any SIPDIS information the USG can provide on individuals and groups in the West Bank and Gaza involved in money laundering and/or terrorism financing. Fayyad did not specify how such information should be passed, but insisted that, once it is received, he will ensure that the PA takes immediate action, to include the freezing of assets. Fayyad highlighted the imminent enactment - by presidential decree -- of AML legislation. He added that a final review of the law is being conducted, after which it will be sent to PA President Abbas. He also noted the recent PA actions against 140 suspected charities, including the freezing of assets (ref A),and added that the PA had identified additional charities for potential future action. -------------- Deeds, Not Words -------------- ¶3. (C) Glaser stated that the draft of the AML law was professionally done, but did not adequately address terrorism financing. Fayyad said that he had directed the PA to make changes to reflect this, but added, "It's not what th law says; it's what we produce after this." Heexplained that, while the PA may not have the sae "body of law," it uses what it has "to accomplih the same result." Fayyad stated that the recet actions against the suspect charities were caried out based on financial and administrative violtions of a 2000 law governing NGOs (reftels A an C). -------------- Trade-based oney Laundering -------------- . (C) Fayyad reiterated his concern, previously epressed in his August 10 meeting with Treasury US Levey (ref B), that trade-based money launderig (TBML) is a serious problem that continues to bnefit Hamas. Glaser stated that Treasury is preared to provide assistance on TBML. He also noted that the ICE attace in Rome would be in the region in October and asked Fayyad to suggest an appropriate intermediary in the PA on TBML issues. Fayyad suggested the Minister of Justice. In addition, Glaser mentioned that the incoming Treasury financial enforcement advisor at Embassy Ammn has considerable experience in this area. Fayya welcomed Treasury's support, adding that immedite action is needed, particularly in cutting off amas's access to funds. He opined that, as the P strengthens AML measures, the perpetrators are ursuing other options, including TBML and money exchanges. -------------- Special Mechanism Rejected JERUSALEM 00001994 002.2 OF 002 -------------- ¶5. (C) Responding to a Treasury proposal to create a special mechanism for Israeli and Palestinian information sharing on money laundering and terrorism financing, Fayyad said the PA's priority is to implement the AML law, establish a strong Palestinian financial intelligence unit (FIU),and "then work to build bridges to the relevant authorities." Fayyad said he would welcome any USG assistance in building the FIU. (Note: First proposed in 2004 after IDF raids on banks in the West Bank, the mechanism was intended to facilitate information exchanges in response to Israeli allegations about banking activities in the West Bank and Gaza. End note.) Fayyad said the proposed mechanism was a response to a specific situation, and the PA, in strengthening its own laws and regulations, has demonstrated its progress on AML and terror financing issues and is now in a position to take aggressive enforcement action. ¶6. (U) Deputy Assistant Secretary Glaser cleared this message. WALLES