EU PROPOSAL TO USG FOR CASH COURIERS / CONTROLS

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SUBJECT: EU PROPOSAL TO USG FOR CASH COURIERS / CONTROLS
COOPERATION

REF: SNYDER EMAIL 12/14/2007 TO U.S.-EU TROIKA PARTICIPANTS ON CASH

COURIER ISSUE


1. (SBU) Summary: EU Member State representatives will discuss on
Jan. 16 how to respond to U.S. proposals for the next U.S.-EU
practitioners' workshop on countering terrorist financing at the
EU's Committee on Terrorism (COTER) working group. A Council
Secretariat contact predicted to USEU that cash couriers could be

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the most feasible substantive topic to include on the agenda and
doubted that there would be "enough meat" for an exclusive
stock-taking session. She encouraged the U.S. to accept the
Commission's proposal to send U.S. representatives to the April
meeting of the EU expert group on cash controls, perhaps to be
followed by a larger workshop meeting in May under the Slovenian
Presidency. End summary.

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Commission and Slovenian Presidency's
Proposal for U.S.-EU Experts Cash Controls
Info Exchange
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2. (SBU) As reported Ref Email, USEU Customs Attache and Econoff
met on December 13, 2007 with the European Commission Directorate
General for Taxation and Customs Union (DG TAXUD's) Unit for Risk
Management, Security and Specific Controls John Pulford (Head of
Unit),Karl Elsner, and Stella Nicoloudaki to discuss the EU's
proposal for U.S.-EU experts to exchange information on cash control
procedures. The EU cash controls regulation came into force in June

2007. At the November 2007 U.S.-EU Terrorist Financing Troika,
TAXUD invited U.S. counterparts to join a future meeting of the EU's
working-level expert group which meets regularly on implementing the
regulation. In some cases (e.g., UK and Germany) but not all (e.g.,
Spain and Italy),the EU customs experts are dual-hatted with law
enforcement functions. The customs group comprises those
authorities charged with receiving the EU's written cash control
declarations, which are in turn sent to the respective EU Member
State (EUMS) Financial Intelligence Units (FIUs). The expert group
primarily serves a "first pillar" internal market mandate, but it
also occasionally discusses "third pillar" law enforcement policy
issues.


3. (SBU) In principle, the EU Presidency holds the reins for
organizing U.S.-EU discussions on cash controls. The Slovenian
Presidency asked TAXUD, which hosts the expert group, to organize
the U.S.-EU exchange on the Presidency's behalf. TAXUD thus
proposed that appropriate USG cash control experts join the April
1-2 working group meeting in Brussels for an initial exchange of
information among practitioners. TAXUD suggested the agenda could
include the following:

--Mechanics of administering respective U.S. and EU cash control
systems (e.g., how do we handle specific difficulties, such as
transiting crew members, minors, casinos, stores);
--Trends (e.g., concealments, sources, etc.);
--Electronic money (e.g., wire transfers, gift cards, emerging
technology)

TAXUD believes that if this initial exchange is fruitful, this could
be the start of a regular exchange with this grouping.

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Countering Terrorist Financing
through Cash Controls
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4. (SBU) The original objective of the EU cash control regulation
was to counter terrorist financing. The expert group attached to
the implementing regulation, however, does not include the broader
group of practitioners, policymakers, prosecutors, analysts, law
enforcement agents, FIUs, and other stakeholders necessary to
conduct a comprehensive U.S.-EU information exchange on countering
terrorist financing via cash controls. (TAXUD hinted that the EU
FIUs in particular must be sensitized to the importance of their
role.) Such an exchange would require outreach to a larger set of
practitioners, even beyond those in regular attendance at the
U.S.-EU terrorist financing workshops. TAXUD explained that this
grouping would require a broader mandate and resources beyond
TAXUD's immediate disposal, but they thought perhaps the French
Presidency could marshal such an event. This would require

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inter-service coordination within the European Commission, bringing
in DG RELEX (External Relations),DG JLS (Justice, Freedom &
Security),and DG MARKT (Internal Market),external coordination
with the Council Secretariat and Presidency. TAXUD would forfeit
the lead once primary discussions leave the first pillar mandate on
cash controls.

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Council Secretariat Views and the Next
U.S.-EU Terrorist Financing Workshop Agenda
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5. (SBU) Econoff followed up on Jan. 9 with Council Secretariat's
Elisabetta Pietrobon (Transatlantic Relations desk). Pietrobon
expressed doubt that the idea of a stock-taking to encapsulate the
U.S.-EU workshop series to date would have "enough meat" to do this
exclusively. Any final report could be initiated at the May
workshop, but would need clearance from the formal EU Council before
being finalized. Pietrobon thought the U.S. proposal to discuss
cash controls was the most promising substantive topic for the
workshop agenda. She suggested U.S. participation in TAXUD's April
cash control working group could be a good preliminary meeting and
be followed up at the May terrorist financing workshop with the
larger group of stakeholder practitioners. Pietrobon's personal
view was that holding U.S.-EU talks on this subject in May would be
advisable as TAXUD's Karl Elsner would retire in June, and the
Commission would take some time to fill his institutional expertise.
For this reason she was personally hopeful to conduct the exercise
prior to the French EU Presidency in July. Pietrobon confirmed that
EU Member States would discuss the possible format and topics for
the next U.S.-EU practitioners' workshop on terrorist financing at
the Jan. 16 COTER working group. Septel will discuss other
reactions to U.S. proposals for the workshop agenda.

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Comment: U.S. Interests / Goals
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6. (SBU) The USG should accept TAXUD's invitation to send select
representatives of U.S. cash control experts to participate in the
April 1-2 expert group. Possible customs-to-customs counterparts
could include ICE and CBP subject matter experts (SMEs) to exchange
views, trends, and best practices related to enforcing cash
controls. A broader dialogue extended to additional law enforcement
officials, either at the May U.S.-EU terrorist financing workshop or
via another venue, would benefit from this initial exchange of
practices. The April meeting could open EU customs officials' eyes
to the much larger counter-terrorism picture, providing a "hook" for
broader discussions with other stakeholders.


7. (SBU) To bolster the strategy of extending security zones
outward from U.S. borders, it is in the U.S. interest to help the EU
stand up a robust, sophisticated approach to cash controls.
Elimination of internal EU border checks through Schengen expansion
(i.e., borders between EU countries as opposed to external EU
borders) has meant enormous losses for investigative and evidentiary
purposes, including cash control information. EU and U.S.
investigator and prosecutor consultations on how cash courier
information can be retrieved and used to support criminal
investigations and forfeiture actions in the United States, EU
Member States, and elsewhere would be of great benefit at this time.
As previously reluctant EU Member States have warmed to the
rationale for imposing written procedures on cash controls, the USG
should now work to cement this buy-in and drive the point home that
this process must be more than another tax-collecting paper
exercise. This could usefully promote broader law enforcement and
counter-terrorism objectives. Joining the April expert group venue
would allow USG counterparts to "get in on the ground floor" in
shaping the EU's evolving approach to enforcing border cash
controls. The USG should demonstrate the benefits of extensive
information sharing to track, investigate, and prosecute bulk cash
smuggling-related crimes and terrorism. We can show how encouraging
cooperation across disparate competent authorities, within and
outside internal EU borders, is a vital and mutual security interest
of global proportions. End comment.

MURRAY