UPDATE ON YEMEN'S ANTI-MONEY LAUNDERING AND

UNCLAS SANAA 001568 SIPDIS DEPARTMENT FOR S/CT FOR GARY NOVIS DEPARTMENT FOR NEA/ARP FOR ANDREW MACDONALD DEPT OF TREASURY WASHDC FOR FINCEN FOR DANIEL HARRIS AND YAMAM FADL DEPT OF JUSTICE FOR ASSET FORFEITURE AND MONEY LAUNDERING SECTION FOR ROBERT STAPLETON FBI FOR TERRORIST FINANCE OPERATIONS SECTION FOR JILL MURPHY E.O. 12958: N/A TAGS: EFIN KCRM KTFN PREL PTER SNAR YM SUBJECT: UPDATE ON YEMEN'S ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING EFFORTS REF: A. 07 SANAA 1418 ¶B. 07 SANAA 1423 ¶C. 07 SANAA 1424 ¶D. 07 SANAA 1425 ¶1. This is an action request. Please see paragraph 7. ¶2. SUMMARY: The ROYG has recently taken some actions in the field of anti-money laundering (AML),including forming a Supervisory Committee to oversee AML efforts and restructuring of the Central Bank's Anti-Money Laundering Information Unit. Yemen, however, still does not have a counter-terrorism financing law. It remains to be seen if these steps will advance the state of play on this issue, which has been otherwise stagnant for over a year. Post recommends that AML training opportunities be provided right away. END SUMMARY. NEW SUPERVISORY COMMITTEE TO ASSIST IN AML AND CTF -------------- -------------- ¶3. In a September 14 meeting, Tax Authority Chair and National Anti-Money Laundering Committee (NAMLC) member Ahmed Ghaleb told Econoff that President Ali Abdullah Saleh is fully committed to carrying out recommendations listed in both the Financial Systems Assessment Team's (FSAT) and the Middle East North Africa Financial Action Task Force's (MENAFATF) reports. (Note: The multi-agency FSAT, led by Gary Novis of S/CT, conducted an in-country evaluation of Yemen's capacity to combat money laundering and terrorist financing, in order to determine its most critical training and technical assistance needs on March 1-7, 2007 (refels). The FSAT team generated a report, which Econoff released to Ghaleb on March 25, 2008. End note). ¶4. Ghaleb said that in early September, President Saleh formed a "Supervisory Committee" to oversee Yemen's anti-money laundering (AML) program, which would be chaired by Minister of Finance Numan al-Suhaibi. This Supervisory Committee is a separate institution from the NAMLC, but all members of the NAMLC would serve on the Supervisory Committee. According to Ghaleb, the Supervisory Committee would have more authority than the NAMLC since it contains more powerful members, including the Deputy Minister of Interior, the Deputy Minister of Industry and Trade, the Deputy Minister of Communications, the Deputy Chair of the National Security Council and the Central Bank Governor. Ghaleb noted that the Supervisory Committee would meet on an ad-hoc basis and will eventually appoint a technical committee to carry out FSAT and MENAFATF recommendations, which would serve as the ROYG's AML Action Plan. (Comment: The sucess of the Supervisory Committee will depend on the political will of its members and whether it complements the NAMLC. End comment.) RESTRUCTURING OF ANTI-MONEY LAUNDERING INFORMATION UNIT -------------- -------------- ¶5. In addition to forming a Supervisory Committee, the ROYG has decided to restructure the Central Bank's Anti-Money Laundering Information Unit (AMLIU). The Head of the AMLIU, Abdo Hezam Saif, told Econoff on September 16 that the World Bank released an assessment report in August 2008 that outlined plans for restructuring the AMLIU. In accordance with recommendations from the report, the World Bank will help establish three units within the AMLIU: one to deal with financial investigations, another for receipt of complaints, and a third for database maintenance and exchange of information. (Comment: The AMLIU already has these three units within its structure, but is very understaffed. This project will be beneficial if it improves efficiency of AMLIU operations and addresses the personnel issue. End Comment.) TRAINING NEEDED -------------- ¶6. Success of Yemen's AML program will depend on adequate training. Unfortunately, since the March 2008 release of the FSAT report, no anti-money laundering training has taken place in Yemen. Ghaleb emphasized that training is crucial, especially for the AMLIU. Abdo Hezam Saif added that twenty ROYG offices will need to be trained in AML techniques, including the Ministry of Interior, Ministry of Industry and Trade, the Customs Authority and the Prosecutor's Office. An optimal location for training of ROYG officials, according to Saif, would be Egypt. He said that the ROYG plans to participate in a workshop sponsored by the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCen) which will take place in Cairo in November. ¶7. ACTION REQUEST: Post recommends that S/CT and the U.S. Department of Treasury's Financial Crimes Enforcement Network organize training for officials from the AMLIU, the Customs Authority and the Attorney General's/Prosecutor's Office in conducting anti-money laundering investigations and other areas, pursuant to recommendations from the FSAT Report. COUNTER-TERRORISM FINANCING LAW STILL PENDING IN PARLIAMENT -------------- -------------- ¶8. Despite progress in the field of AML, Yemen still does not have a Counter-Terrorism Financing (CTF) law. A joint technical committee (which was formed from the NAMLC and the Central Bank of Yemen's Anti-Money Laundering Information Unit (AMLIU)) completed a draft AML and CTF law in July 2007, with assistance from the United Nations Office of Drugs and Crime (UNODC),the IMF and the World Bank. The committee submitted the draft law to the Cabinet in mid-August 2007. Ghaleb informed Econoff on September 14, 2008, that the draft law is still being reviewed by three committees in Parliament: the Finance Committee, the Islamic Sharia Committee and the Constitutional Committee. He added that the NAMLC is consulting with the Yemen Lawyers Association about the draft law and is "pushing hard to get the law approved." One of the major reasons that the CTF legislation is held up in Parliament, according to Ghaleb, is that some Parliamentarians assert that the term "terrorism" is poorly defined. Another stumbling block is the Yemen Lawyers Association. According to the Central Bank's Anti-Money Laundering Unit General Manager for Legal Affairs, Mustafa Kaid, there is still a lot of misunderstanding about the draft law among the lawyers. In order to increase awareness of the law among Parliamentarians, the AMLIU sent three members of the Finance Committee (one from the pro-government General People's Congress (GPC) and two from the opposition Joint Meetings Party (JMP)) to Beirut in June 2008 on a study tour of Lebanon's AML institutions. GPC Finance Committee member Mohamed Abdo Saeed confirmed to Econoff on September 15 that the draft law is in the late stages of review and may be presented to Parliament for a final vote by the end of ¶2008. COMMENT -------------- ¶9. Not much action has taken place regarding AML and CTF in Yemen since the release of the FSAT report. Post does not expect rapid passage of the CTF law because Parliament's attention is focused on other issues, like the April 2009 Parliamentary elections. President Saleh, however, appears genuinely interested in AML and CTF as demonstrated by his recent founding of a Supervisory Committee and the restructuring of the AMLIU. Whether these two bodies will be effective mechanisms for AML remains to be seen. Post will continue to engage the ROYG through training opportunities and possibly field visits by experts from the U.S. Treasury's Financial Crime Enforcement Network. SECHE