SAUDI MINISTRY OF THE INTERIOR ON REGULATING

S E C R E T SECTION 01 OF 02 RIYADH 000569

NOFORN
SIPDIS

U.S. DEPARTMENT OF THE TREASURY FOR JANICE GARDNER AND
DANIEL GLASER

E.O. 12958: DECL: 04/13/2019
TAGS: ECON PREL ETTC KTFN SA
SUBJECT: SAUDI MINISTRY OF THE INTERIOR ON REGULATING
CHARITIES

Classified By: CDA DAVID RUNDELL FOR REASONS 1.4 (B) AND (D)


1. (S/NF) Summary: On March 31, FinAtt, DepFinAtt, and GRPO
officers met with members of Saudi Arabia's Ministry of
Interior (MOI) to respond to their request for information on
charity regulation. The MOI's Mabahith had requested
information explaining how the U.S. regulates U.S. charities
sending funds overseas. Mabahith's COL Mubarak al-Shahrani
chaired the meeting and was accompanied by Captain Muhammad
al-Qaisi, a MOI representative on Saudi Arabia's Permanent
Counterterrorism Committee (PCTC).


2. (S/NF) Treasury and GRPO officers provided a detailed
overview of the multifaceted U.S. regulatory structure that
is designed to stop terrorist financing via charities while
still protecting the donor community, an experience that
Saudi officials appeared to be interested in learning from as
they craft their own detailed regulations. Treasury provided
a binder of documents detailing the USG approach to terrorist
financing and charities regulation. End summary.

Charitable Regulation
--------------


3. (S/NF) At a March 31 meeting, SAG officials from the
Ministry of Interior described the Saudi Arabian Government's
(SAG) effort to create a Charities Commission and stated that
MOI was reaching out to both the UK and the U.S. governments
for information on charities regulation. Their intent seemed
to be to benefit from USG experiences as the SAG establishes
a regulatory framework for its charities. They stated the
SAG did not have a time limit for the establishment of the
Charities Commission and would only institute it when they
were certain it could effectively address terrorist financing
and protect the donor community.


4. (S/NF) The SAG officials stated that Saudi Arabia's
current regulations on this are 16 years old and require
updating. They acknowledged that some Saudi charities have
been abused and utilized for "personal gain," and noted that
as a result, charitable organizations based in Saudi Arabia
have been prohibited for the past six years from moving funds
outside the Kingdom. They said the SAG is taking an
interagency approach - including the MOI, the Central Bank,
and other agencies - toward fixing this regulatory problem.
They also mentioned the challenge they faced in balancing
charitable regulation with their religious duty to give to
charity, or zakat, one of the five pillars of Islam.


5. (S/NF) The SAG officials asked detailed questions
regarding which agencies in the USG monitor international
transfers by U.S.-based charities, how to monitor the
movement of cash via ports of entry, and the process by which
individuals and entities are added to and removed from
sanctions lists. They asked how a charity in the U.S. is
legally formed and who inspects the activities of the sector,
largely covered in the U.S. by the IRS. Treasury noted that
enforcement in the U.S. was not limited to terrorism
charges; for example, the USG has used immigration or tax
violations against those found donating to or raising money
for banned organizations.


6. (S/NF) The SAG officials asked about foreign branches of
U.S.-based charities and, in particular, who is responsible
for overseeing these branches. The officials repeated the
SAG mantra that the host government was responsible for
branch office activities, although they admitted that
government officials in poor countries were easy to bribe -
making local enforcement unlikely. They asked about the
relationship between U.S. regulators and the host country
government, and the involvement of U.S. embassies in
monitoring the work of U.S. charities operating overseas.


7. They expressed appreciation for the substantive
documentation provided by Treasury, asked for electronic
copies on CD for easier translation, and requested a
compilation of the USG statutes relevant to the regulation of
charities.

Comment
--------------


8. (S/NF) The Saudi officials displayed a deep and
sophisticated awareness of the problem of terrorist financing

RIYADH 00000569 002 OF 002


via charities. They were frank about the challenges facing
Saudi Arabia in this field and asked probing policy
questions, revealing the struggle the SAG faces as it works
to cut off terrorist financing via NGOs while still
protecting a key pillar of Islam - and therefore of Saudi
society - the giving of charitable contributions. The Saudi
officials seemed to be considering a solution that will allow
them to review and approve individual transfers.


9. (S/NF) When pressed to say when the SAG would stand up the
long awaited Charities Commission, the officials explained
that the launching of the Commission will result in the
resumption of international funds transfers by Saudi-based
charities. The SAG officials insisted that these gates would
not be opened until the proper regulatory structure is in
place that will ensure NGO funds will not support terrorism.


10. (S/NF) This interest by the MOI in charities regulation
tracks with comments the Economic Section recently heard from
the Ministry of Social Affairs to the effect that the
Charities Commission would be authorized as part of a larger
law governing civil society, and that this law had recently
been forwarded by the Council of Ministers to the Cabinet for
either final approval or return to the Council for further
revision. End Comment.
RUNDELL