CODEL LYNCH REVIEWS MOROCCO'S TERRORISM FINANCE

UNCLAS RABAT 000327

SIPDIS
SENSITIVE

STATE FOR S/CT, H AND NEA/MAG

E.O. 12958: N/A
TAGS: ECON EFIN PTER ETRD MO
SUBJECT: CODEL LYNCH REVIEWS MOROCCO'S TERRORISM FINANCE
COUNTERMEASURES

REF: STATE 029978 (NOTAL)


1. (SBU) Summary: In an April 10 meeting with the Ministry
of Finance, CODEL Lynch encouraged Morocco's new Financial
Intelligence Unit, launched on the morning of the CODEL's
visit to Morocco, to closely coordinate with U.S.
counterparts to ensure maximum integration with relevant
financial authorities in other countries. Government of
Morocco representatives thanked the Representatives Lynch and
Inglis for their interest in Morocco's efforts to combat
financial crimes, and praised U.S. technical assistance,
growing investment and commercial ties. Although the new
Unit will take some time to recruit staff and define its
responsibilities, it would respond to the U.S. offers for
assistance, its president assured the delegation. End
Summary.


2. (SBU) Ministry of Finance Secretary General Abedeltif
Loudyi, along with President of the Financial Intelligence
Unit (FIU) Hassane Abdellaoui and Bilateral Relations
Director Abdelaziz Khaoua, welcomed Representatives Lynch and
Inglis to Morocco. Excusing Minister of Finance Mezzouar due
to his obligations in Parliament, Loudyi commented with
satisfaction on Morocco's economic and assistance relations
with the U.S., highlighting the Millennium Challenge Account
Compact and the U.S.-Morocco Free Trade Agreement (FTA) as
particularly helpful in promoting growth and strengthening
investment and commercial ties. Loudyi also praised
technical assistance provided by USAID to Morocco.


3. (SBU) Representative Lynch noted that both he and
Representative Inglis are "friends of Morocco" who had
supported approval of the FTA in 2005. Representative Lynch
congratulated Morocco for its efforts to combat terrorist
financing and for its official inauguration of the new FIU
that morning. Representative Lynch noted that he has
assisted in establishing FIUs in many countries, including
Afghanistan and Jordan, and observed that the key to success
is making informed early decisions on technology and
training. Representative Lynch recommended that the new FIU
work closely with the U.S. Treasury's Financial Crimes
Enforcement Network (FinCEN) to ensure useful networking
capabilities with international partners and adopt
international best practices for an FIU.


4. (SBU) Loudyi thanked the Congressmen for their counsel
and observed that Abdellaoui's prior experience with the
International Monetary Fund and the central bank had
sensitized him to the need to develop useful and compatible
working relationships with international partners. Loudyi
also outlined the extant training relationship with the
European Union to provide technical assistance for the FIU
and the Ministry of Finance, a collaboration that includes on
average one training session per week for two years. The new
FIU, Loudyi elaborated, will continue the interaction the
Finance Ministry had conducted with banks and financial
institutions to ensure adherence to practices mandated to
fight money laundering and terrorist financing. The FIU
would be strengthened in its work relative to the Finance
Ministry, however, by the incorporation of elements from the
Ministry of Justice and the central bank.


5. (SBU) Responding to Representative Inglis's query about
Moroccans, perceptions of the FTA, Loudyi endorsed the
benefits of the increases in investment and trade since the
date of its effect, but observed that Moroccan exporters need
to adapt to American norms and standards to take full
advantage of the U.S. market.


6. (SBU) Representative Inglis asked Loudyi his assessment
of how the government's policies have minimized the appeal of
extremism in Morocco. Loudyi highlighted the kingdom's steps
toward democracy and measures to strengthen respect for human
rights and political pluralism. King Mohammed VI has
emphasized social programs to reduce the development
disparities between urban and rural populations, helping
defuse extremist sentiments. Additionally, he continued,
increased transparency through reforms, such as the new FIU,
the Central Agency for the Prevention of Corruption and
upcoming judicial changes, have given citizens a greater
stake in society. The goal is clear, Loudyi concluded, but
"we still have a lot of work to do." Representative Lynch
emphasized that concerns over terrorist financing can
undermine the integrity of trading and financial relations.
The proper functioning of financial relations, he stated,
will depend on ensuring that the wrong people are not able to
exploit the legitimate financial system. In response to

Representative Lynch,s question about hawalas, Loudiyi said
it is foreigners rather than Moroccans who are the primary
users, and approximately 80 percent of financial transactions
go through the formal financial system and its institutions.


7. (SBU) The Charge concluded the meeting by again
congratulating Loudyi and Abdellaoui on the inauguration of
the FIU, and reminding them of the offer of cooperation from
the U.S. Treasury's Office of Technical Assistance. Loudyi
assured the Charge that Abdellaoui would respond to the
Treasury with specific requests as the FIU takes definition.


8. (U) This cable has been cleared by Congressional Staff
Member Bruce Fernandez.


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