MACEDONIA: A/S O'BRIEN VISIT HIGHLIGHTS TERRORISM

S E C R E T SKOPJE 000695 SIPDIS NOFORN SIPDIS TREASURY FOR ABIGAIL SULLIVAN AND AMANDA EDWARDS E.O. 12958: DECL: 08/11/2017 TAGS: KTFN PTER EFIN PREL MK SUBJECT: MACEDONIA: A/S O'BRIEN VISIT HIGHLIGHTS TERRORISM FINANCING ISSUES REF: A. SKOPJE 452 ¶B. SKOPJE 274 Classified By: POL/ECON OFFICER M. LATHAM FOR REASONS 1.4 (b) and (d) Summary -------------- ¶1. (SBU) During his June 11-12 visit, A/S Patrick O'Brien encouraged Macedonian government officials to continue strengthening the country's counter-terrorism financing and anti-money laundering law, as well as those institutions responsible for implementation of the law. O'Brien applauded the GOM's efforts to harmonize its laws with international standards (ref. A),and urged that Macedonia improve enforcement of illicit cash couriers and increase its oversight of charities. GOM officials reiterated their intention to continue to coordinate with the USG and the international community on combating financial crimes and terrorism. End Summary. GOM Officials -------------- ¶2. (U) A/S O'Brien met with the following GOM officials during his visit: Minister of Interior Gordana Jankulovska Minister of Finance Trajko Slaveski Governor of the National Bank Petar Gosev Director of the Administration for Security and Counter Intelligence (MOI) Saso Mijalkov Deputy Minister of Foreign Affairs Zoran Petrov Director of the Money Laundering Prevention Directorate Vane Cvetanov Director of the Agency for Financial Police Miodrag Labovic Director General of the Customs Administration Vanco Kargov Director of the Public Revenue Office Goran Trajkovski Deputy Public Prosecutor Jovan Ilievski Director of the Department of Banking Regulation Militca Arnaudova National Bank Senior Supervisor Frosina Celeska Director of the Bureau for Public Security (MOI) Ljupco Todorovski Head of the Organized Crime Department (MOI) Mitko Cavkov Build Strong, Independent Institutions -------------- ¶3. (SBU) During his June 11-12 visit to Skopje, A/S O'Brien congratulated GOM officials on drafting a new money laundering and terrorism financing law that will bring Macedonia's legal framework closer to compliance with international standards. (Note: at the time of the visit the Law on the Prevention of Money Laundering and Terror Financing was in its second phase of review in the Parliament). Recognizing that Macedonia is currently not a significant hub for terrorism financing, he emphasized the importance of putting into place preventative measures that would deter terrorists from exploiting Macedonia for their financial needs in the future, particularly by exploiting the charitable sector or bulk cash couriers. He stressed with GOM officials--including the Deputy Minister of Foreign Affairs, the Minister of Finance, the FIU Director and the Director of the Financial Police--that in order to effectively implement the new AML/CFT law and deter terrorism financing activity from taking place within Macedonia, it is important that the government invest resources in institutional capacity, including those offices responsible for investigating financial crimes. He also noted the importance of providing institutions with independence from political influence. O'Brien explained in his meeting with Minister of Finance Slaveski that money invested in the organizations that investigate and prosecute financial crimes would have a number of positive results, including a higher tax collection rate and an improved business environment that would attract legitimate foreign investors. Investing in the institutions would also have a multiplier effect on their successes in fighting organized crime, narco-trafficking, and human trafficking. Slaveski agreed the GOM would continue to strengthen those institutions. ¶4. (SBU) Macedonia's efforts against money laundering and terrorism financing was reviewed by a MONEYVAL team in March. In his meetings, O'Brien highlighted the importance of both using MONEYVAL's suggestions to improve Macedonia's laws and also effectively implementing the new laws. O,Brien encouraged the Minister of Finance and National Bank Governor to use the RLA as a resource to strengthen the draft AML/CFT legislation. He also noted that the U.S. had recently gone through a FATF evaluation, which had led to improvements in the U.S. system. The National Bank's Director of Banking Regulation, Milica Arnaudova, agreed that this type of international evaluation is useful. She said that the National Bank was already working on areas in which MONEYVAL had noted the need for improvement, even though MONEYVAL's final evaluation would not be issued until early 2008. Coordination Is Critical -------------- ¶5. (SBU) The Macedonian government's effort to combat financial crimes has been hampered by a lack of coordination between the various institutions responsible for gathering data, supervising financial institutions, investigating financial crimes, and prosecuting those crimes. During a dinner with the Governor of the National Bank, the Ministers of Finance and Interior, and the head of Macedonia's intelligence service, O'Brien took the opportunity to promote greater coordination both within the government, and between the government and the private sector. National Bank Governor Gosev said later in an individual meeting with O'Brien that the GOM's inter-agency steering group for money laundering and terrorism financing was weak and needed to be strengthened. Gosev noted that the GOM would work to strengthen this coordination, partly in response to suggestions from MONEYVAL. Regulation and Oversight of Charities -------------- ¶6. (SBU) O'Brien also underscored to GOM officials the need to effectively regulate charities, which have been used globally to raise and channel funds for terrorist activities and radicalization. Deputy Minister of Foreign Affairs expressed a strong interest in counter-terror financing, noting that Macedonian authorities discovered that al Haramin had been active within its borders and subsequently closed the branch. He informed O,Brien that the branch office changed its name and relocated to Kosovo. To demonstrate the need for enhanced measures against terrorism and radicalization, the Deputy Minister also cited examples of extremists attempting to take over the Macedonian Islamic Community by force on two separate occasions. O,Brien stressed the importance of religious freedom and urged GOM to focus on the conduct of charities rather than their religious affiliation. He encouraged the development of a supervisory regime for all NGOs which could require registration, record-keeping, a limit on the number of bank accounts available to each charity, and on-site inspections and audits to engage in. In O,Brien,s meeting with Minister of Finance Slaveski, Slaveski noted that Macedonian law required all not-for-profit legal entities to file annual financial statements with the GOM's Central Registry. Similar to his meeting with Petrov, O'Brien described to Slaveski the importance of going further and ensuring that these types of organizations were legally registered and regularly audited and inspected. He also emphasized that this should be done for all charities, and not only those linked to specific ethnic or religious groups. ¶7. (S//NF) The following talking points were used by A/S O,Brien to discuss cash courier issues and the activities of a Macedonia-based NGO, Bamiresia, with officials from the Government of Macedonia. These officials included the Deputy Minister of Foreign Affairs, the Finance Minister, the Director of the FIU, and the Director of the Financial Police. These talking points were approved for verbal disclosure only. They are included in this cable for information purposes only and are not for further use. ¶8. (S//REL TO USA, MKD) Urge Government of the Former Yugoslav Republic of Macedonia to consider U.S. concerns regarding Bekir Halimi and the Macedonia-based NGO, Bamiresia. ¶9. (S//REL TO USA, MKD) The Director of the Macedonia-based NGO Bamiresia is Bekir Halimi. Halimi is known to have extremist views, to include verbal support for conducting attacks against synagogues. ¶10. (S//REL TO USA, MKD) According to May 2007 information, Bekir Halimi's students had first priority for receiving education funds from Al-Waqf al-Islamiya. Al-Waqf al-Islamiya had also set aside separate funds preferably for people who had gone on jihad. ¶11. (S//REL TO USA, MKD) According to information available to the U.S. in mid-2006, Bamiresia has been involved in money laundering activities. For example, in the past, a travel agency arranged travel for Bamiresia-sponsored pilgrims. The company would launder money through these individuals via fraudulent charges, making the money look like legitimate profits. The money was then either carried into Macedonia or it was deposited at a Turkish bank to which Bamiresia had access. ¶12. (S//REL TO USA, MKD) Another laundering method employed by Bamiresia was to have donors deposit funds into Bamiresia's members' personal accounts in Albania and Kosovo. The money was then withdrawn from the bank and carried across the border into Macedonia. ¶13. (S//REL TO USA, MKD) As of late 2006, Bamiresia's leadership uses students from Macedonia, and elsewhere in the Balkans, who are studying in the Middle East, as conduits for money. ¶14. (S//REL TO USA, MKD) These efforts are coordinated by Sabedin Salman and Sadula Bajrami. ¶15. (S//REL TO USA, MKD) As of December 2006, Bamiresia had also devised a method to help transfer large monetary donations from the Middle East using private companies. Using donations from Arab countries, Bamiresia purchases goods and transports the material into Macedonia for subsequent sale back into cash. ¶16. (S//REL TO USA, MKD) Bamiresia's Director, Bekir Halimi, is involved in couriering funds into Macedonia. As of 2006, Halimi traveled to Saudi Arabia to collect funds from an employee at the Saudi Arabia-based NGO al-Waqf al-Islamiya. Halimi personally carried funds to Macedonia for Bamiresia. ¶17. (S//REL TO USA, MKD) As of December 2006, Bamiresia's main sources of funding were from Middle Eastern NGOs -the Saudi Arabia-based al-Waqf al-Islamiya and the Kuwait-based Revival of Islamic Heritage Society (RIHS). ¶18. (U) RIHS offices in Afghanistan and Pakistan were named on the UN 1267 Sanctions Committee list in 2002. ¶19. (S//REL TO USA, MKD) In October 2006, a Bamiresia fundraiser based in Saudi Arabia approached the head of Bamiresia and was urged to take steps to officially register Bamiresia as the Macedonia branch office of the International Islamic Relief Organization (IIRO). ¶20. (S//REL TO USA, MKD) In March 1995, the IIRO branch office in Macedonia was closed and its members were expelled from the country. However, in 2005, IIRO reopened a branch office in Tetovo, Macedonia. ¶21. (U) IIRO offices in the Philippines and Indonesia were named on the UN 1267 Sanctions Committee list in 2006. ¶22. (S//REL TO USA, MKD) As of mid-December 2006, the leadership of Bamiresia planned to rename and reorganize the NGO. These changes were intended to change its image and help it overcome recent problems with the transfer of money from Middle Eastern donors. ¶23. (S//REL TD USA, MKD) As of April 2007, a member of Active Islamic Youth (AIO) coordinated with a fellow AIO member, who is an associate of the Islamic Jihad Union (IJU), on the transfer of a substantial sum of money from Macedonia to possibly Kosovo. ¶24. (U) As of April 2007, IJU was implicated in planning terrorist attacks against U.S. interests in Germany, according press reports. ¶25. (U) In 2005, IJU was named on the UN 1267 Sanctions Committee list. ¶26. (S//NF) Upon receiving this information, FIU Director Cvetanov said he would work with Macedonian intelligence services and the financial police Director to investigate the financial activities of Bekir Halimi. He assured O,Brien that when the GOM gathers sufficient information, he will share it with the USG and urged the USG to do the same if we observe any new developments. Focus on Cash Couriers -------------- ¶27. (SBU) Macedonia's laws require that persons entering the country declare cash or cash equivalents worth 10,000 euros or more, and the Customs Administration does seize undeclared cash over this amount if it is discovered (ref. B). O'Brien explained to Minister of Interior Jankulovska and Director General of the Customs Administration Vanco Kargov in separate meetings how terrorists use cash couriers to move money across borders, especially as government oversight of financial institutions improves. He encouraged the GOM to strengthen its enforcement of cross-border cash flows. Kargov said that Customs had made some seizures of undeclared cash by using data supplied by the Ministry of Interior on international passengers' travel patterns. Customs targeted those passengers who had suspicious travel patterns; some of them turned out to be carrying undeclared cash. Jankilovska recognized the challenges associated with the porous borders in the region and expressed an interest in working with Kosovo to limit the ability of extremist Muslim groups to exploit the open border once final-status is achieved. Comment: Continuing On The Right Path -------------- ¶28. (SBU) A/S O'Brien's visit was timely and should help focus the GOM on critical actions necessary to prevent terrorism financing. Macedonia is currently revising its legal framework for financial crimes, including drafting a new money laundering and terrorism financing law. In order to accelerate their efforts to improve their AML/CFT regime, GOM officials expressed a strong interest in receiving technical assistance from the United States. O'Brien's messages on the need to regulate charities, enforce cash couriers laws, strengthen the relevant institutions, and improve domestic and international coordination were well received by GOM officials. ¶29. (U) This cable was cleared by A/S O'Brien on August 10. NAVRATIL