Identifier
Created
Classification
Origin
07TELAVIV2808
2007-09-20 13:09:00
CONFIDENTIAL
Embassy Tel Aviv
Cable title:
TREASURY, GOI DISCUSS SUPPORT FOR SHARING OF
how-toVZCZCXYZ0001 PP RUEHWEB DE RUEHTV #2808/01 2631309 ZNY CCCCC ZZH P 201309Z SEP 07 FM AMEMBASSY TEL AVIV TO RUEHC/SECSTATE WASHDC PRIORITY 3346 INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 2850 RUEHLB/AMEMBASSY BEIRUT PRIORITY 2788 RUEHEG/AMEMBASSY CAIRO PRIORITY 0798 RUEHJM/AMCONSUL JERUSALEM PRIORITY 7963 RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
C O N F I D E N T I A L TEL AVIV 002808
SIPDIS
SIPDIS
PLEASE PASS TO TREASURY FOR DAS DANIEL GLASER.
E.O. 12958: DECL: 09/12/2017
TAGS: EFIN KTFN KCRM KWBG EAID IS
SUBJECT: TREASURY, GOI DISCUSS SUPPORT FOR SHARING OF
INFORMATION RELATED TO ILLICIT FINANCE WITH PALESTINIANS
Classified By: Ambassador Richard H. Jones for reasons 1.4 (b/d)
C O N F I D E N T I A L TEL AVIV 002808
SIPDIS
SIPDIS
PLEASE PASS TO TREASURY FOR DAS DANIEL GLASER.
E.O. 12958: DECL: 09/12/2017
TAGS: EFIN KTFN KCRM KWBG EAID IS
SUBJECT: TREASURY, GOI DISCUSS SUPPORT FOR SHARING OF
INFORMATION RELATED TO ILLICIT FINANCE WITH PALESTINIANS
Classified By: Ambassador Richard H. Jones for reasons 1.4 (b/d)
1. (C) SUMMARY: A delegation from the Treasury Department's
Office of Terrorist Financing and Financial Crimes (OTFFC),
led by Deputy Assistant Secretary Daniel Glaser, met
September 10-11 with an inter-agency Government of Israel
(GOI) group to follow up on a GOI request to restart
discussions on an earlier initiative to improve anti-money
laundering and combating the financing of terrorism (AML/CFT)
cooperation between the GOI and Palestinian Authority (PA).
The GOI believes that the establishment of a strong Terrorist
Financing (TF) legal framework to combat terrorist financing,
a robust financial intelligence unit (FIU),and - most
importantly - an effective PA enforcement capability, are
prerequisites before broader GOI-PA cooperation on illicit
finance can be considered. The GOI strongly supports
technical assistance to the Palestinian FIU (and even offered
to provide behind-the-scenes support),but believes that the
international community - in particular, the United States -
needs to take the lead. The GOI emphasizes that a
requirement to meet certain AML/CFT benchmarks should be part
of the international donor agreements with the PA in Fall
2007. Despite some legal wrangling over the absence of
specific terrorist financing laws in the PA, it is clear that
the GOI's primary concern is enforcement against terrorism
financing and not the specific administrative nature of a
Palestinian FIU. END SUMMARY.
--------------
Background
--------------
2. (C) Glaser began by recounting that discussion to improve
GOI-PA cooperation on illicit financing began in the winter
of 2004 in the aftermath of an Israeli raid on Palestinian
banks in Ramallah. At that time, Treasury and the GOI began
discussing the potential for creating a mechanism to
facilitate information sharing with the PA that would obviate
or diminish the GOI's perceived need for engaging in military
operations against PA financial institutions. Part of this
initiative consisted of the provision of technical assistance
to the Palestine Monetary Authority to enable it to develop
an FIU capable of receiving information related to illicit
financial activity, and, in coordination with relevant
authorities, take appropriate enforcement action. The
project was ultimately delayed due to the Hamas parliamentary
election victory and the subsequent national unity government
with Fatah. With the Hamas takeover of Gaza and the renewal
of relations with the Fayyad-led government, however, Glaser
said the GOI had approached several USG officials in the
hopes of restarting the project.
--------------
Concerns Regarding Palestinian Legislation
--------------
3. (C) Paul Landes, of the Israel Money Laundering and Terror
Financing Prohibition Authority (IMPA) at the Ministry of
Justice (MOJ),expressed concern that draft anti-money
laundering legislation recently passed by the Palestinian
Parliament does not include specific mention of terrorist
financing. Landes wondered on what legal basis the PA could
pursue terrorist finance crimes without a specific law to
that effect, and how IMPA could cooperate with the FIU
without a legal framework? Glaser said that the version of
the law he had seen, developed with assistance from the
International Monetary Fund (IMF),was largely in compliance
with international standards with respect to money
laundering, but did not address terrorism finance.
--------------
GOI: Enforcement is What Matters
--------------
4. (C) After some discussion of the matter, Udi Nulman of the
Israeli Security Agency (ISA) made clear that the GOI's real
concern was with enforcement. Nulman said Fayyad and Abbas
took a strong first step in declaring their intention to
target terrorist financing. Passing the law is the next
step, said Nulman, followed by capacity building,
enforcement, information collection and sharing. Glaser
agreed that the will to act was most important, noting that
the law and the creation of a FIU serve as a useful starting
point, but that cooperation and information sharing can occur
at any stage. Eyal Paskovitch of the National Security
Council (NSC) said that the goal is to create an FIU that
also has authority over Gaza, although he was skeptical about
how this would operate in practice. Nevertheless, Paskovitch
said that most Palestinian banks are more than willing to
cooperate with a FIU.
5. (C) Nulman used the recent PA action against 103 charities
in the West Bank and Gaza as an example of the PA's lack of
commitment to, and enforcement of, a strong AML/CFT regime.
According to Nulman, most of the charities are unrecognizable
to the Israelis, and Nulman speculated that many exist "in
name only." Nulman added that the Israelis have not noticed
any visible impact on Hamas after Fayyad's decision to close
these charities. Paskovitch added that there were reports
that Fayyad had taken additional action against 17 other
charities, but their names were not yet published.
--------------
Tangible Steps for Building the FIU
--------------
6. (C) Landes suggested several possible areas for
Palestinian-Israeli cooperation, including the exchange of
information on trade-based terrorist financing, suspicious
transaction reports, and freezing terrorist bank accounts.
Landes said the GOI could offer technical assistance and
share information technology, but that the GOI should not be
viewed as taking the lead on any assistance project. Nulman
suggested that a first step for the FIU could be to collect
the same reports on suspicious transactions that the
Palestinian banks submit to their Israeli correspondent
partners. The most important factor, said Glaser, is that
the PA own the process and that it not be imposed from
outside. He added that Treasury would cooperate closely with
the IMF and USAID, both of which have done preliminary work
on the issue.
7. (C) Irit Ben-Aba, Deputy Director General for Economic
Affairs at the Ministry of Foreign Affairs (MFA),said the
GOI recommends utilizing the upcoming international donor
fora (e.g. the September 25 International Ad Hoc Liaison
Committee meeting, and December Donor Group Meeting) to link
financial assistance to the PA with the establishment of
clear AML/CFT and regulatory benchmarks. Ben-Aba said that
advances towards a Palestinian FIU with clear benchmarks
would help reassure donors and financial institutions that
their money will end up in the right place. The GOI offered
to provide Treasury with a paper in the near future outlining
specific benchmarks for the FIU with a relevant timeline.
--------------
PALESTINIAN ISLAMIC BANK
--------------
8. (C) The Israelis passed a paper on the Palestinian Islamic
Bank (PIB) and raised concern of its support of Hamas.
Specifically, the Israelis allege that the bank holds funds
for Hamas and has transferred funds on Hamas's behalf. They
also allege that the PIB has a correspondent relationship
with JP Morgan Chase and asked the USG to talk with them
about terminating the relationship. On other banking
matters, the Israelis stated that the Islamic Qatari Bank was
looking to open a branch in Gaza.
9. (U) Israeli participants: Ambassador Miriam Ziv, Deputy
Director General for Strategic Affairs, MFA; Irit Ben-Aba,
Deputy Director General for Economic Affairs, MFA; Yael
Winner, International Affairs, MOJ; Paul Landes, Legal
Counsel, IMPA, MOJ; Udi Nulman, ISA; Oren Drisen, ISA; Michal
Finkelstein, MOF; Eyal Paskovitch, NSC; Meir Malka, IDF;
Ariel Shafranksy, Deputy Director, Counter Terrorism, MFA;
Dan Arbel, Director, North America Department, MFA; Oded
Yossef, Director, Coordination Department, MFA. U.S.
participants: Daniel Glaser, DAS, OTFFC; Brian Grant,
Director of Global Affairs, OTFFC; Daniel Harris, Policy
Advisor, OTFFC; Jason Witow, Acting Economic Counselor; Noah
Siegel, Economic Officer.
10. (U) Deputy Assistant Secretary Glaser cleared this cable.
********************************************* ********************
Visit Embassy Tel Aviv's Classified Website:
http://www.state.sgov.gov/p/nea/telaviv
You can also access this site through the State Department's
Classified SIPRNET website.
********************************************* ********************
JONES
SIPDIS
SIPDIS
PLEASE PASS TO TREASURY FOR DAS DANIEL GLASER.
E.O. 12958: DECL: 09/12/2017
TAGS: EFIN KTFN KCRM KWBG EAID IS
SUBJECT: TREASURY, GOI DISCUSS SUPPORT FOR SHARING OF
INFORMATION RELATED TO ILLICIT FINANCE WITH PALESTINIANS
Classified By: Ambassador Richard H. Jones for reasons 1.4 (b/d)
1. (C) SUMMARY: A delegation from the Treasury Department's
Office of Terrorist Financing and Financial Crimes (OTFFC),
led by Deputy Assistant Secretary Daniel Glaser, met
September 10-11 with an inter-agency Government of Israel
(GOI) group to follow up on a GOI request to restart
discussions on an earlier initiative to improve anti-money
laundering and combating the financing of terrorism (AML/CFT)
cooperation between the GOI and Palestinian Authority (PA).
The GOI believes that the establishment of a strong Terrorist
Financing (TF) legal framework to combat terrorist financing,
a robust financial intelligence unit (FIU),and - most
importantly - an effective PA enforcement capability, are
prerequisites before broader GOI-PA cooperation on illicit
finance can be considered. The GOI strongly supports
technical assistance to the Palestinian FIU (and even offered
to provide behind-the-scenes support),but believes that the
international community - in particular, the United States -
needs to take the lead. The GOI emphasizes that a
requirement to meet certain AML/CFT benchmarks should be part
of the international donor agreements with the PA in Fall
2007. Despite some legal wrangling over the absence of
specific terrorist financing laws in the PA, it is clear that
the GOI's primary concern is enforcement against terrorism
financing and not the specific administrative nature of a
Palestinian FIU. END SUMMARY.
--------------
Background
--------------
2. (C) Glaser began by recounting that discussion to improve
GOI-PA cooperation on illicit financing began in the winter
of 2004 in the aftermath of an Israeli raid on Palestinian
banks in Ramallah. At that time, Treasury and the GOI began
discussing the potential for creating a mechanism to
facilitate information sharing with the PA that would obviate
or diminish the GOI's perceived need for engaging in military
operations against PA financial institutions. Part of this
initiative consisted of the provision of technical assistance
to the Palestine Monetary Authority to enable it to develop
an FIU capable of receiving information related to illicit
financial activity, and, in coordination with relevant
authorities, take appropriate enforcement action. The
project was ultimately delayed due to the Hamas parliamentary
election victory and the subsequent national unity government
with Fatah. With the Hamas takeover of Gaza and the renewal
of relations with the Fayyad-led government, however, Glaser
said the GOI had approached several USG officials in the
hopes of restarting the project.
--------------
Concerns Regarding Palestinian Legislation
--------------
3. (C) Paul Landes, of the Israel Money Laundering and Terror
Financing Prohibition Authority (IMPA) at the Ministry of
Justice (MOJ),expressed concern that draft anti-money
laundering legislation recently passed by the Palestinian
Parliament does not include specific mention of terrorist
financing. Landes wondered on what legal basis the PA could
pursue terrorist finance crimes without a specific law to
that effect, and how IMPA could cooperate with the FIU
without a legal framework? Glaser said that the version of
the law he had seen, developed with assistance from the
International Monetary Fund (IMF),was largely in compliance
with international standards with respect to money
laundering, but did not address terrorism finance.
--------------
GOI: Enforcement is What Matters
--------------
4. (C) After some discussion of the matter, Udi Nulman of the
Israeli Security Agency (ISA) made clear that the GOI's real
concern was with enforcement. Nulman said Fayyad and Abbas
took a strong first step in declaring their intention to
target terrorist financing. Passing the law is the next
step, said Nulman, followed by capacity building,
enforcement, information collection and sharing. Glaser
agreed that the will to act was most important, noting that
the law and the creation of a FIU serve as a useful starting
point, but that cooperation and information sharing can occur
at any stage. Eyal Paskovitch of the National Security
Council (NSC) said that the goal is to create an FIU that
also has authority over Gaza, although he was skeptical about
how this would operate in practice. Nevertheless, Paskovitch
said that most Palestinian banks are more than willing to
cooperate with a FIU.
5. (C) Nulman used the recent PA action against 103 charities
in the West Bank and Gaza as an example of the PA's lack of
commitment to, and enforcement of, a strong AML/CFT regime.
According to Nulman, most of the charities are unrecognizable
to the Israelis, and Nulman speculated that many exist "in
name only." Nulman added that the Israelis have not noticed
any visible impact on Hamas after Fayyad's decision to close
these charities. Paskovitch added that there were reports
that Fayyad had taken additional action against 17 other
charities, but their names were not yet published.
--------------
Tangible Steps for Building the FIU
--------------
6. (C) Landes suggested several possible areas for
Palestinian-Israeli cooperation, including the exchange of
information on trade-based terrorist financing, suspicious
transaction reports, and freezing terrorist bank accounts.
Landes said the GOI could offer technical assistance and
share information technology, but that the GOI should not be
viewed as taking the lead on any assistance project. Nulman
suggested that a first step for the FIU could be to collect
the same reports on suspicious transactions that the
Palestinian banks submit to their Israeli correspondent
partners. The most important factor, said Glaser, is that
the PA own the process and that it not be imposed from
outside. He added that Treasury would cooperate closely with
the IMF and USAID, both of which have done preliminary work
on the issue.
7. (C) Irit Ben-Aba, Deputy Director General for Economic
Affairs at the Ministry of Foreign Affairs (MFA),said the
GOI recommends utilizing the upcoming international donor
fora (e.g. the September 25 International Ad Hoc Liaison
Committee meeting, and December Donor Group Meeting) to link
financial assistance to the PA with the establishment of
clear AML/CFT and regulatory benchmarks. Ben-Aba said that
advances towards a Palestinian FIU with clear benchmarks
would help reassure donors and financial institutions that
their money will end up in the right place. The GOI offered
to provide Treasury with a paper in the near future outlining
specific benchmarks for the FIU with a relevant timeline.
--------------
PALESTINIAN ISLAMIC BANK
--------------
8. (C) The Israelis passed a paper on the Palestinian Islamic
Bank (PIB) and raised concern of its support of Hamas.
Specifically, the Israelis allege that the bank holds funds
for Hamas and has transferred funds on Hamas's behalf. They
also allege that the PIB has a correspondent relationship
with JP Morgan Chase and asked the USG to talk with them
about terminating the relationship. On other banking
matters, the Israelis stated that the Islamic Qatari Bank was
looking to open a branch in Gaza.
9. (U) Israeli participants: Ambassador Miriam Ziv, Deputy
Director General for Strategic Affairs, MFA; Irit Ben-Aba,
Deputy Director General for Economic Affairs, MFA; Yael
Winner, International Affairs, MOJ; Paul Landes, Legal
Counsel, IMPA, MOJ; Udi Nulman, ISA; Oren Drisen, ISA; Michal
Finkelstein, MOF; Eyal Paskovitch, NSC; Meir Malka, IDF;
Ariel Shafranksy, Deputy Director, Counter Terrorism, MFA;
Dan Arbel, Director, North America Department, MFA; Oded
Yossef, Director, Coordination Department, MFA. U.S.
participants: Daniel Glaser, DAS, OTFFC; Brian Grant,
Director of Global Affairs, OTFFC; Daniel Harris, Policy
Advisor, OTFFC; Jason Witow, Acting Economic Counselor; Noah
Siegel, Economic Officer.
10. (U) Deputy Assistant Secretary Glaser cleared this cable.
********************************************* ********************
Visit Embassy Tel Aviv's Classified Website:
http://www.state.sgov.gov/p/nea/telaviv
You can also access this site through the State Department's
Classified SIPRNET website.
********************************************* ********************
JONES