KAZAKHSTANI FINANCIAL INTELLIGENCE UNIT VISITS UNITED

UNCLAS SECTION 01 OF 02 ASTANA 000925

SENSITIVE
SIPDIS

STATE FOR INL/AAE, INL/C, SCA/CEN; FINCEN FOR DAVID TEITELBAUM

E.O. 12958: N/A
TAGS: PGOV PREL SNAR KCRM KCOR KZ
SUBJECT: KAZAKHSTANI FINANCIAL INTELLIGENCE UNIT VISITS UNITED
STATES

ASTANA 00000925 001.2 OF 002



1. (U) Sensitive but unclassified. Not for public Internet.


2. (U) SUMMARY. A delegation from the Committee of Financial
Monitoring of the Ministry of Finance participated in an FIU
orientation program presented by the Financial Crimes Enforcement
Network (FinCEN). The orientation program was created by FinCEN for
newly established FIUs. In addition to FinCEN, the delegation met
with INL Deputy Assistant Secretary Snyder and representatives from
the IRS, including one from the information technology department.
Upon their return to Kazakhstan, members of the delegation began
preparing to brief the rest of the Committee on information learned
during the trip. The Chairman of the Committee is also continuing
to push Anti-Money Laundering (AML) legislation through the upper
house of Parliament. END SUMMARY.

BACKGROUND


3. (U) The Committee on Financial Monitoring -- Kazakhstan's
Financial Intelligence Unit (FIU) -- was established under the
Ministry of Finance in April 2008 and Mussiraly Utebayev was
appointed chairman six months later. During his first meeting with
the Embassy's INL Office, Utebayev requested a study tour to the
United States to learn more about the structure and operation of his
Committee's U.S. counterpart, the Financial Crimes Enforcement
Network (FinCEN).

FINCEN VISIT


4. (U) In response, INL sponsored a study tour for senior officials
from the FIU to visit FinCEN April 13-17. During the visit, the
Kazakhstani FIU officials were engaged and raised many issues,
frequently asking detailed questions and insisting on equally
detailed answers. They were especially interested in how FinCEN
evaluates its effectiveness, including the number of investigations
conducted using FinCEN information. At the end of their visit to
FinCEN, Chairman Utebayev made a presentation on the future of the
FIU.


5. (SBU) The FIU is already working on IT development and has funds
allocated for the next three years. The delegation, which included
the head of the IT department, was interested in FinCEN's systems
and, because FinCEN's systems are operated by the IRS, was pleased
to have the opportunity to meet with the IRS during their trip.
They asked the IRS detailed questions about data storage,
transmission, and system modernization. The FIU is facing some
bureaucratic problems in developing its system and the Kazakhstanis
were relieved to find they are on the right track. The delegation
also asked about procedures for providing access to different
agencies and who bears responsibility for leaked information. In
this regard, they asked about actual cases of misuse or leakage of
information and disciplinary actions in response to such incidents.
The FIU is clearly very concerned about the risks of providing
information to users outside of the FIU.


6. (U) The delegation sought advice on how best to get information
from law enforcement agencies -- through direct access or by
uploading information from databases to an FIU system. FinCEN
representatives explained that the biggest issue is not how
information is accessed, but not allowing law enforcement to know
the reason for specific information requests.


7. (U) The delegation asked questions about a range of financial
monitoring issues: financial monitoring of attorneys, monitoring
the various categories of financial transactions in banks, training
for bank compliance officers and employees, penalties for
non-compliance, and procedures for interaction between FinCEN and
those subject to financial monitoring. During the discussion of the
various reporting forms used by FinCEN, the delegation agreed that
developing a single report for both suspicious and currency

ASTANA 00000925 002.2 OF 002


transactions would be a better solution for Kazakhstan.


8. (U) Chairman Utebayev was especially interested in FinCEN's
analysis of the dangers of money laundering through mortgage loans
and the issue of attorney-client privilege. He expressed a desire
to cooperate with FinCEN in such areas and requested FinCEN's
mathematical models in order to perform similar analyses in
Kazakhstan. He also told the Director of FinCEN that he was willing
to cooperate with FinCEN in its research on foreign currency flows.


9. (SBU) The delegation also delved deeply into organizational and
structural issues, asking about the division of duties among
analysts, the time spent per case, and the procedures for dealing
with political corruption cases. Utebayev asked about the
educational background and training of FinCEN's employees.

THE FUTURE OF THE FIU


10. (SBU) Chairman Utebayev is looking to protect his FIU from
corruption and, thus, would like to separate the FIU from the
Ministry of Finance and operate it as an independent body. He
believes that the FIU is vulnerable within the Ministry because
officials of other Committees, such as the Customs Committee and Tax
Committee, may not be pleased with the work of the FIU and may
attempt to stand in its way. This concern seems to be influencing
many of Utebayev's decisions about the operation the FIU. For
example, he does not want to provide database access to law
enforcement agencies and is planning to provide information only in
response to official requests.


11. (SBU) Utebayev is also interested in his FIU playing a leading
role in overseeing government bailout funds transferred to private
companies. He was asked about the role FinCEN is playing in U.S.
bailouts.


12. (SBU) During his meeting with INL DAS Snyder, Utebayev stated
that, at full strength, the FIU will employ 65 people in Astana and
30 in Almaty. Currently there are approximately 30 people in
Astana. Utebayev asked for assistance in four areas: (1) support
for Kazakhstan's entry into the Egmont Group; (2) help in arranging
additional study tours to countries with federal-style system of
government; (3) staff training; and (4)support for cooperation with
the World Bank in joint research projects.

FURTHER DEVELOPMENTS


13. (U) Kazakhstan has concluded a memorandum of cooperation with
Russia in the areas of information technology and legislation. The
Embassy's INL Office plans to sponsor training for the FIU's
personnel, but does not want to duplicate assistance provided by
Russia or other donors. We thus hope that the U.S. delegation can
hold a donor meeting on Kazakhstan with the World Bank and Russia on
the margins of the EAG meeting in St. Petersburg June 8-10.

AML LAW UPDATE


14. (SBU) During a follow-up meeting in Astana, Utebayev updated INL
on the status of Anti-Money Laundering (AML) legislation. Utebayev,
a former Senator, has had a series of meetings with the main
committees of the Senate involved with the legislation. He is
concerned that the Senate wants to amend it to cover both "terrorism
financing" and the financing of "extremist organizations." Utebayev
is planning to offer to draft FATF recommendations to address this
issue during the EAG in June rather than amending the AML
legislation. Currently, he is trying to convince key Senators not
to make further conceptual changes to the draft law, but to accept
it as is.

MILAS