TERRORIST FINANCE: FOLLOW-UP ACTION REQUEST ON

UNCLAS MADRID 002072 SIPDIS SIPDIS STATE FOR EEB/ESC/TFS (JJALLORINA),S/CT, AND INL E.O. 12958: N/A TAGS: EFIN ETTC KTFN KCRM PREL PTER SP SUBJECT: TERRORIST FINANCE: FOLLOW-UP ACTION REQUEST ON ILLICIT CASH COURIERS - SPAIN REF: STATE 152088 ¶1. (SBU) This message is sensitive but unclassfied. ¶2. (SBU) The information provided in this message is keyed to the questions in reftel's para. 5. ¶3. (U) The June, 2006 Financial Action Task Force (FATF) mutual evaluation of Spain found that Spain's "structures for dealing with terrorist financing are generally sound." However, with respect to FATF Special Recommendation IX on "Cross Border Declaration & Disclosure", FATF found that: "The declaration system as currently implemented raises some issues of effectiveness." The FATF did not provide detail on what were the issues of effectiveness. Spanish officials were aware that FATF would make this an issue. As a result, the 10/13/06 Boletin Oficial (Spain's equivalent of the Federal Register) specified in Order EHA/1439/2006 that as of 2/14/07, it would be obligatory to declare upon entry to Spain or exiting Spain the possession of euros 10,000 or more in cash. The Spanish government issued a 2/13/07 statement reminding the public of this obligation as of 2/14/07. ¶4. (U) Individuals caught smuggling an amount larger than euros 10,000 are only allowed to keep a maximum of euros 1,000 and are liable to pay a fine of up to twice the amount of cash found. ¶5. (SBU) EconOff asked Spanish Financial Intelligence Unit (FIU) Area Chief Jesus Torbado whether most people who live in Spain were aware of the declaration obligation given that it is not widely publicized. For example, individuals flying into Spain are not obliged to declare that they are carrying less than euros 10,000 in cash. The same is true with respect to the millions of people that take ferries every year from Spain to North Africa and back. Torbado recognized that this was a problem despite the fact that in Spain, as in most legal systems, ignorance of the law and/or regulations is not a valid excuse for non-compliance. Torbado said that the GOS was considering publicizing the declaration requirement more widely. Beyond checking for bulk couriers per se, according to press reports Spanish law enforcement agencies have up to 700 mosques under surveillance. Spanish authorities are concerned about money being raised in these institutions for the purpose of supporting yihad. ¶6. (SBU) The FIU's Jesus Torbado told EconOff that since February 14 several cases (he did not have statistics though) had been filed against individuals that had been found with more than euros 10,000 on them. Spanish authorities prosecute individuals on the grounds of material support for yihad. For instance, on 10/24/07, Spanish police arrested six North Africans who, among other activities, were raising money for Islamic prisoners. On 9/20/07, Spain arrested two Pakistani nationals on terrorism finance related charges. These arrests were coordinated with the FBI. On 7/24/07, two Syrian nationals were charged with "collaboration with a terrorist organization, drawing up false contracts as well as money laundering." Spanish prosecutors noted in a 5/1/07 El Pais (Spain's leading daily) article that funds collected in Spain were ending up financing Al Qaeda activities outside Spain, but the prosecutors did not mention bulk cash smuggling as one of the ways for getting the money out - they mentioned hawalas, false contracts and Bahamian accounts as the conduits for getting the money out. ¶7. (SBU) The Embassy economic section and Department of Homeland Security Immigration and Customs Enforcement (DHS/ICE) attache have exchanged information with Spanish counterparts on a French-Spanish "twinning" program to establish a Financial Intelligence Unit (FIU) in Morocco. Embassy Madrid's ICE office has provided bulk cash courier smuggling training to Morocco, which is complementary to the French-Spanish program. Embassy's Economic Section and ICE office intend to query Spanish officials further on how they intend to make the euros 10,000 declaration requirement more effective. Embassy Madrid's ICE office is also working with Madrid Barajas airport officials on bulk cash courier smuggling issues in the drugs context. ¶8. (SBU) Comment: Although Spanish law enforcement agencies have not focused (at least publicly) on bulk cash smuggling, a logical means of getting money from Spain to, for instance, North Africa, is through cash smuggling. Both flights and the heavily used ferries between Spain and North Africa would be fairly easy ways to smuggle cash. Moreover, given the low cost of financing many terrorist operations, we wonder whether the euros 10,000 declaration requirement is sufficient, even if more rigorously implemented. In the drug context, ICE is working with Spanish officials at Barajas airport to sensitize them to bulk cash smuggling. We will explore the possibility of expanding this cooperation to the terrorism finance arena. AGUIRRE