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