APHSCT TOWNSEND'S FEBRUARY 6 MEETING WITH SAUDI

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 000369

SIPDIS

SIPDIS

NSC PASS TO MALVESTI AND KIFAYAT

E.O. 12958: DECL: 02/10/2017
TAGS: PREL PTER EFIN KTFN CVIS GCC SA
SUBJECT: APHSCT TOWNSEND'S FEBRUARY 6 MEETING WITH SAUDI
FINANCE MINISTER AL ASSAF

Classified By: Ambassador James C. Oberwetter for reasons 1.5 (b) and (
d).


1. (C) Summary: On February 6 in Jeddah, Saudi Finance
Minister Ibrahim Al Assaf told Assistant to the President for
Homeland Security and Counterterrorism Frances Fragos
Townsend that the SAG would implement the Royal Decree
requiring individuals carrying those funds in excess of
$16,000 to declare funds upon exit or entry. But he did not
have a date or plan for implementation. Minister Al Assaf
said that implementation of the Royal Decree would have to be
preceded by a public education campaign (given the Saudi
custom of carrying cash when traveling) and by building bank
offices at airport and border gates, so cash can be deposited
upon departure or arrival. He confirmed strong cooperation
with the U.S. and promised to follow-up directly with the
head of the Customs service and Ambassador Oberwetter. End
Summary.


2. (C) In their first meeting, which took place in the
Jeddah office of the Finance Ministry on February 6, Minister
Al Assaf greeted APHSCT Townsend and mentioned that he had
met with Deputy Secretary of the Treasury Kimmitt in Davos
the previous week. When Townsend shared that she would
travel to the Shaybah oil field in the Empty Quarter during
her visit, Minister Al Assaf said Saudi Arabia is planning to
build a highway through the Empty Quarter to the Omani port
of Sallalah, which would give Saudi Arabia a direct
commercial outlet to the Indian Ocean, bypassing the UAE
ports on the lower Gulf.

Who's in Charge
--------------


3. (C) APHSCT Townsend asked about the implementation of the
King's decree that would require individuals carrying cash in
excess of $16,000 to declare funds to Saudi customs officials
upon entering/exiting the Kingdom. Al Assaf said that he had
previously discussed this issue with Treasury Under Secretary
Levey, and added that SAG Customs is the lead agency, not
Mubahith. APHSCT Townsend said that this arrangement made
sense, comparing it to the U.S. system. APHSCT Townsend
noted that U/S Levey has the lead on this issue from a law
enforcement perspective. While this requires Treasury to
cooperate with investigators, it is ultimately the best
arrangement. (Note: SAG Customs has the legal authority to
enforce the cash declaration law but has not thus far.)

Implementation of Entry/Exit Regulations
--------------


4. (C) APHSCT Townsend pointed out that it had been over a
year since the King announced the new legislation, and
emphasized the importance of stopping illicit cash flow,
particularly to destinations like Iraq. The U.S. has
provided training to Saudi customs officials and is prepared
to offer further training, she added. But she asked if the
Minister had a timeline for implementing the King's decree,
and whether implementation would be phased in starting at
certain airport and border gates, or done simultaneously at
all entry/exit points. Progress is taking place, insisted Al
Assaf, and Saudi Customs is moving towards an implementation
phase beginning with the airports. Entry/exit booths are
being built in the civil aviation terminals of airports, as
well as in the land ports of entry, he said. Banks were
provided training and infrastructure enhanced to encourage
travelers to deposit money. The entry and exit forms were
drafted, with the assistance of the U.S. The date for actual
implementation is uncertain, according to Al Assaf, and also
requires Customs to coordinate with the MOI, he said. But he
undertook to report back to the Ambassador once he has talked
with technical people.

Public Information Campaign is Key
--------------


5. (C) Townsend said she assumed that significant education
was needed because the requirements are so new. Al Assaf
agreed and said that the Saudi Customs will conduct an
extensive public information campaign before the
implementation date. When APHSCT Townsend asked how long
this would last, he was uncertain but said that it would be
long enough to prepare both the people and the facilities.


6. (C) Al Assaf stressed that controlling the entry and exit
of funds has been a priority for the Saudi Central Bank
(SAMA) long before September 11, noting that it is also in
the best interest of the Kingdom. APHSCT Townsend
acknowledged this point and added that the issue goes to the

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heart of the integrity of the financial system. It is
difficult to regulate financial flows if the infrastructure
is not in place for easy access to bank transfers and ATM
machines, he said, which is the case in many of the
neighboring countries where Saudis go on travel. In
addition, he described the Saudi custom of carrying cash when
going on vacation. This needed to be changed, and people
need to be encouraged to rely on the banking sector instead
of carrying cash. He added that it is a question of
education and said that they were working hard to achieve
progress. Al Assaf confirmed cooperation with the U.S. and
promised to consult with the U.S. delegation during the
upcoming Spring Meetings of the Work Bank and IMF in
Washington.


7. (C) Comment: Embassy will follow up with the Finance
Ministry and has requested meeting with the Director General
of Saudi Customs. End Comment.


8. (U) APSCT Townsend has cleared this cable.
OBERWETTER