TERROR FINANCE: PROGRESS BUT CHARITIES "STALLING"

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000178

SIPDIS

NOFORN
SIPDIS

STATE FOR NEA/ARP, EB/ESC/TFS; NSC FOR HINNEN, TREASURY FOR
KRISTEN HECHT; S/CT FOR MONOSSON; AMMAN FOR GRANT

E.O. 12958: DECL: 02/03/2017
TAGS: ECON PGOV PTER PREL KU KTFN
SUBJECT: TERROR FINANCE: PROGRESS BUT CHARITIES "STALLING"
GOK INITIATIVES

REF: A. KUWAIT 0059

B. 06 KUWAIT 4706

C. 06 KUWAIT 3503

Classified By: Charge d'Affaires Matt Tueller for reasons 1.4 (b) and (
d).


1. (C/NF) Summary: Following up on the Ambassador's January
16 meeting with the Minister of Social Affairs and Labor
(MOSAL, ref A),Econoff met with Nasser Al-Ammar, Director of
the Charities and Philanthropic Department at MOSAL on
February 3 to discuss ongoing GOK efforts to strengthen
oversight of Kuwaiti charity and philanthropic organizations.
He was encouraged by the recent approval of KNet - a Kuwait
debit card system - and SMS text messaging to collect
donations, thereby creating an electronic record both the GOK
and charities can use to monitor financial flows. However,
he noted that other initiatives (ref C) have been delayed by
dissenting members of the joint MOSAL-Charities committee in
charge of their approval and implementation. End summary.


2. (C/NF) On February 3, Al-Ammar briefed Econoff on the
current status of a series of MOSAL-led initiatives designed
to increase transparency of financial transactions (ref C).
As reported on January 28 in the Kuwait daily Al-Watan, two
of the four initiatives under consideration by a joint
committee of MOSAL and charity officials have now received
final approval. The first will allow for the collection of
donations through KNet - a Kuwaiti debit card system - while
the second will allow charities to solicit donations through
SMS text messaging. To use KNet, a charity must: 1) have no
violations of MOSAL statutes; 2) have a bank account
recognized by the Central Bank of Kuwait; 3) collect funds
only for projects that have received MOSAL (domestic) or MFA
(international) approval; 4) collect donations only in the
charity's headquarters; and 5) allow only Kuwaitis or
individuals with residency sponsored by the same charity to
collect funds. Similar rules will govern the solicitation of
donations via SMS messaging: 1) charities must have no
violations of MOSAL statutes; 2) charities may only use
accounts recognized by the Central Bank of Kuwait; 3)
charities may collect funds only for projects that have
received MOSAL (domestic) or MFA (international) approval;
and 4) MOSAL must pre-approve the text of all outgoing
messages. Charities may use either a major telecommunication
company (i.e., Wataniya or MTC) or a third-party to carry out
this service.


3. (C/NF) Despite the recent measures, Al-Ammar noted that
representatives of some charities on the joint
MOSAL-Charities committee reviewing the proposals continue to
delay progress overall. These individuals, he said, object
to the initiatives in principle as perceived GOK interference
in their internal affairs. He added that some charities also
fear that donors will grow too comfortable with the anonymity
of donating electronically and will no longer make cash
donations, decreasing charities' liquidity. Al-Ammar,
however, believes the new initiatives will greatly improve
accounting and auditing methods for GOK and the charities
alike. KNet and SMS messaging, in particular, will enable
the GOK to determine exactly how much money charities receive
from the services, and how and where they use it. Yes, MOSAL
could push the remaining initiatives through without the
Committee's approval, acknowledged Al-Ammar, but this would
undermine the trust and mutual respect established after
years of dialogue.


4. (C/NF) Al-Ammar also updated Econoff on the pending
distribution of automated collection terminals that resemble
vending machines in high-volume areas like the airport and
local malls. According to the latest design concept the
machines will have a touch screen interface that will allow
donors to select their charity, view ongoing projects, and
make electronic payments with ease. The menu will be offered
in four languages: Arabic, English, Tagalog, and Urdu.
Charities will be allowed to list their societies on the
machines free of charge. To cover the cost, the vendor will
charge donors a small fee per transaction. Al-Ammar noted
that the surcharge has generated debate as to whether it is
in accordance with Islamic jurisprudence, but alerting donors
to the charge before they begin the transaction (i.e., via a
clearly visible sign on top of the machine) should resolve
any lingering concerns.

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For more Embassy Kuwait reporting, see:

KUWAIT 00000178 002 OF 002


http://www.state.sgov.gov/p/nea/kuwait/index. cfm?cables

Or Visit Embassy Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/
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TUELLER