(C) TERROR FINANCE: GOK SLOW TO FREEZE ASSETS OF

S E C R E T SECTION 01 OF 02 KUWAIT 000283 SIPDIS SIPDIS STATE FOR NEA/ARP, EEB/ESC/TFS; TREASURY FOR KRISTEN HECHT E.O. 12958: DECL: 03/09/2018 TAGS: EFIN KU KTFN PGOV PREL PTER SUBJECT: (C) TERROR FINANCE: GOK SLOW TO FREEZE ASSETS OF THREE KUWAITI UNSCR 1267 DESIGNEES REF: A. STATE 7443 ¶B. KUWAIT 218 ¶C. STATE 192459 KUWAIT 00000283 001.2 OF 002 Classified By: CDA Alan G. Misenheimer for reasons 1.4 (b) and (d) ¶1. (S) Summary and Comment: Despite assurances by senior officials from the Kuwaiti MFA and National Security Bureau, the head of AML/CTF at the Central Bank of Kuwait (CBK) said he has not received any instructions from the GOK and therefore has not taken any action to freeze the accounts of the three Kuwaiti terrorist facilitators designated by the UNSCR 1267 Committee on January 16. The compliance officer from private Kuwaiti Islamic bank Kuwait Finance House (KFH), which holds the accounts of all three individuals, told econoff on March 12 that KFH has not received any notice or instruction from the CBK or any GOK agency since the UN designations were announced. KFH independently decided to freeze the accounts of these three individuals following their USG domestic designation in December 2006, but the GOK subsequently ordered KFH to allow the individuals full access to their government salaries deposited with KFH. ¶2. (S) We cannot state with certainty at this point that senior Kuwaiti officials are intentionally misrepresenting the facts regarding the GOK's response to these three UN designations. The wheels of bureaucracy turn slowly within the GOK, and it is possible that the instruction to freeze the accounts of these three terrorist facilitators has simply not yet made it all the way from the leadership of the MFA to the action officer at the Central Bank and subsequently to the compliance officer at KFH. However, the GOK has a history of defending these three terrorist facilitators, which included manuevering with Qatar in order to block their designation in the UNSC in 2007. Post will continue to press the GOK to fully comply with its UNSCR 1267 obligations. End Summary and Comment. ¶3. (C) On January 30, Post informed the GOK of the UNSCR 1267 Committee's decision to designate Kuwaiti citizens Hamid Al-Ali, Jaber Al-Jalamah, and Mubarak Mushakhas Al-Bathali as terrorist facilitators and reminded the GOK of its obligation to freeze the assets of these three individuals (Ref A). ¶4. (C) On February 13 A/Polcouns and Econoff met with Ambassador Khaled Al-Maqamis, MFA Director of Follow-up and Coordination, to discuss the implementation of the asset freeze (Ref B). Al-Maqamis acknowledged that the GOK was obligated to comply with the terms of UNSCR 1267 and said the GOK would fulfill its obligations. Econoff responded to GOK concerns regarding how to make subsistence funds available to the family members of the designees and referred Al-Maqamis to UNSCR 1452 for details on these provisions. ¶5. (C) In a March 4 meeting with the CDA, MFA U/S Khaled Al-Jarallah said the MFA had instructed the Central Bank of Kuwait (CBK) to freeze the assets of the three Kuwaitis. He thanked the CDA for the guidance regarding provisions for the families and said that the MFA would follow the necessary procedures to ensure that the families received subsistence funds. He said the CBK had already implemented the freezing of the assets per MFA instructions. ¶6. (S) On March 9 Econoff followed-up with Talal Al-Sayegh, Deputy Manager of CBK's On-Site Supervision Department and the Bank's lead on all CTF/AML issues, to ask whether CBK had frozen the assets. Al-Sayegh (strictly protect) said he was unaware of any instructions from MFA and did not believe that the assets had been frozen. On March 10, Econoff followed up with Al-Maqamis's assistant, Faisal Al-Enezi, who said he could not confirm that the assets had been frozen. ¶7. (C) At the third meeting of the USG-GOK Gulf Security Dialogue hosted by Kuwait on March 10 (septel) Ambassador Al-Maqamis and National Security Bureau Deputy President Shaykh Thamer Ali Al-Salem Al Sabah affirmed to the USG delegation that the assets of these three individuals have been frozen. ¶8. (S) On March 12 Econoff spoke to Kuwait Finance House (KFH) Director of AML/CTF Medhat Al-Kharashi. KFH is the private Kuwaiti Islamic Bank which holds the accounts of Al-Ali, Al-Jalamah and Al-Bathali. According to Al-Kharashi (strictly protect),KFH has not been instructed by the Central Bank or any GOK agency to freeze the accounts of the three Kuwaitis following their UN designations. He said that KFH independently made a decision to freeze the accounts of KUWAIT 00000283 002 OF 002 the individuals in early 2007, following their USG domestic designations on December 7, 2006 (Ref C). He commented that because KFH's decision was based on a USG domestic designation and OFAC listing, and not a UN designation, the GOK instructed KFH not to freeze the government salaries of these individuals. Subsequently, Al-Bathali filed a suit against KFH for freezing his assets. According to Al-Kharashi the court case is still pending. Al-Khurashi said that KFH would welcome official instructions from the GOK and CBK to freeze the accounts of these three individuals since such instructions would protect KFH. However, Al-Kharashi insists that KFH has received no instructions from the GOK in response to the UN designations. ********************************************* * For more reporting from Embassy Kuwait, visit: http://www.state.sgov.gov/p/nea/kuwait/?cable s Visit Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ ********************************************* * Misenheimer