TREASURY A/S PATRICK O'BRIEN MEETS WITH SAUDI

UNCLAS SECTION 01 OF 02 RIYADH 000976

SIPDIS

SENSITIVE
SIPDIS

TREASURY FOR A/S O'BRIEN AND DANIEL HARRIS

E.O. 12958: N/A
TAGS: ECON EFIN ETTC KTFN PTER SA
SUBJECT: TREASURY A/S PATRICK O'BRIEN MEETS WITH SAUDI
CUSTOMS DIRECTOR SALEH AL-KHILWEY

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SUMMARY
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1. (U) On April 23, the newly-appointed Saudi Customs
Director General Saleh bin Manea Al-Khilwey told Treasury
Assistant Secretary for Terrorist Financing and Financial
Crimes Patrick O'Brien that the implementation of new cash
declaration procedures is imminent. The SAG has relayed the
same message on numerous occasions in the past. Department
of Homeland Security Attach Chabot also offered to arrange
training with Saudi and U.S. Customs officials. End summary.

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NEW CASH DECLARATION PROCEDURES: OVERVIEW
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2. (U) A/S O,Brien opened the meeting asking about the
status of the program. Mr. Al-Khilwey, who was appointed in
March, stated that the SAG is "about to implement" the new
procedures, and reviewed the program. (Note: The SAG has
relayed the same message on numerous occasions in the past,
including with Treasury U/S Levy in March 2007. End note.)
He stated the new regulations outline the rights and
responsibilities of both the traveler and the Customs
official. According to the proposed regulations, travelers
must declare quantities of cash and precious metals greater
than or equal to SR60,000 to the Customs department at
points of entry or exit. Mr. Al-Khilwey emphasized that the
new regulations do not prohibit travelers from carrying cash
into or out of the country, but only require that amounts
over SR60,000 be declared. Financial institutions that work
as cash couriers must provide their licensing papers to the
Saudi Arabian Financial Intelligence Unit (SA FIU) ahead of
time. The new regulations will apply at all land, air, and
sea ports. To inform the public of the new procedures,
Customs will place large signs at the ports. Mr. Al-Khilwey
provided A/S O,Brien with copies of the new Customs
declaration form.

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INVESTIGATION PROCEDURES
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3. (U) Mr. Al-Khilwey then went on to describe the
investigation process. The Customs Department and the
Ministry of Interior share responsibility for customs
investigation procedures. If a Customs official discovers
suspicious activity and a failure to declare cash or precious
metals totaling SR60,000 or greater at the port of entry or
exit, Customs will confiscate the commodity and hold it while
an investigation is conducted. Customs then refers the case
to the Ministry of Interior's Board of Prosecution and
Investigation.

--If the investigation finds that the failure to declare was
because the commodity came from or was intended for an
illicit source, the case goes to the Ministry of Interior
court system. If the suspect is found guilty, then the cash
or metals are deposited with the Ministry of Finance. If the
suspect is found innocent, then the commodities are returned
to him.

--If the investigation finds that the failure to declare was
to evade paying Customs duties, then the case goes through
the Customs "mini-court" system. This court system applies
to the failure to declare precious metals only, and does not
include cash, since there is no duty to be paid for carrying
cash. When A/S O,Brien asked about penalties for failing to
declare cash over SR60,000, Mr. Al-Khilwey referred him to
the courts.

--Mr. Al-Khilwey also noted that, in the initial
implementation phase, if a traveler fails to declare cash,
but the Customs official believes that the failure to declare
was an innocent mistake, the official will allow the traveler
to complete the form a second time with no penalty.

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TIMELINE FOR IMPLEMENTATION
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4. (U) A/S O,Brien asked about the timeline for
implementation of the new cash declaration procedures. Mr.
Al-Khilwey explained that implementation is taking time
because of the SAG interagency process. He said the Customs

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Department is currently in the implementation phase. At
present, computer software is being installed at the ports,
signs informing travelers of the new procedures are ready,
and training for Customs officials would occur "next week."
Once these steps are completed, he said, the SAG will be
ready to implement the new procedures.


5. (U) Mr. Al-Khilwey then offered information about the new
computer system being installed to help implement the
procedures. Once the Customs official collects the new
declaration form, the official will enter the data into the
computer system in both Arabic and English. Data fields
include information such as place of departure and arrival;
nationality, passport number, and date of birth of the
traveler; traveler's address in Saudi Arabia; and purpose of
travel. The computer system is set according to the
regulations and will not allow input of values for cash or
precious metals totaling under SR60,000. The system also
provides statistical reporting, and officials can see
breakdowns according to travel destinations, country of
origin, person, and commodity. The network includes 32
computers linked at Customs headquarters and all ports. The
system is instantaneous and Customs officials can provide
reports at the request of the Ministry of Interior.

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U.S. OFFERS TRAINING
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6. (SBU) DHS Attach Chabot commented that the U.S. could
offer assistance in training Customs officials. A/S O'Brien
spoke of a recent DHS/ICE cash smuggling training conducted
in the Philippines that was largely successful and could be
adapted for the KSA. Mr. Al-Khilwey replied that he welcomes
any cooperation from the U.S., but that at this time the
focus of training should be on how to implement the new
program, which is taking place in-house. The Customs
department is providing a three-day training course on the
new system, with one day each on how to recognize suspicious
activity, how to use the guide for implementation, and how to
enter information into the database. He said that once this
training is complete, the SAG should be able to implement the
new procedures within a few weeks.

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COMMENT
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7. (U) The major gap in the proposed declaration procedure
is the lack of punishment or deterrent within the Customs
court system for failure to declare cash. At the conclusion
of the meeting, A/S O,Brien emphasized the importance of
implementing smooth and prompt procedures for confiscating
undeclared cash, so that travelers will face real
consequences for failing to meet the requirement to declare.


8. (U) A/S O,Brien has cleared this cable.
FRAKER