TREASURY D/S WOLIN DISCUSSES ILLICIT FINANCE AND

S E C R E T RIYADH 000228 NOFORN SIPDIS TREASURY FOR D/S NEAL WOLIN E.O. 12958: DECL: 02/27/2020 TAGS: ECON PREL EFIN KTFN SA SUBJECT: TREASURY D/S WOLIN DISCUSSES ILLICIT FINANCE AND IRAN PRESSURE TRACK IN SAUDI ARABIA Classified By: Ambassador James B. Smith for reasons 1.4(b),(c),and ( d) ¶1. (S/NF) Summary: On February 13-14, Treasury Deputy Secretary Neal Wolin visited Saudi Arabia, discussing illicit finance and Iran policy issues with Assistant Minister of Interior HRH Prince Muhammad bin Naif bin Abdulaziz Al Saud (MBN),Minister of Finance Ibrahim Al Assaf, and Saudi Arabian Monetary Agency (SAMA) Governor Muhammad Al Jasser. MBN and Wolin reviewed U.S.-Saudi cooperation to combat terrorist financing. Assaf and Jasser sought resolution on conflicts pertaining to Saudi Arabia's mutual evaluation drafted by the Financial Action Task Force/Middle East North Africa Financial Action Task Force (FATF/MENAFATF). End summary. Combating the Financing of Terrorism -------------- ¶2. (S/NF) Wolin thanked MBN for his leadership and continued cooperation with the Treasury Department and GPRO to combat terrorist financing. MBN said that there is "no alternative" to cooperation on this issue, and stressed there is always room for improvement. When asked about recent information-sharing efforts on Taliban Finance, MBN said the issue was very important and Saudi Arabia would continue to look for new ways to combat Taliban financing. He underscored the complexity of the issue for the Ministry of Interior (MOI),with over ten million people coming to Saudi Arabia each year for Hajj, including one million from Pakistan, and with 2.5 million South Asians working in the Kingdom. The MOI monitors these individuals as they can, especially during Hajj and Umrah. He said the Saudi government (SAG) cannot deny entry of individuals into the Kingdom for Hajj and Umrah unless they pose a direct threat to Saudi Arabia's security. He cited an example of a six-hour deliberation over a possible entry request by Saddam Hussein during Iraq's invasion of Kuwait, which the SAG ultimately decided they could not deny. Wolin acknowledged the complexity of the problem, and stressed the importance of continued information-sharing on terrorist financing emanating from the Kingdom, particularly with respect to the Taliban and other Af/Pak-based groups. ¶3. (SBU) Regarding the Saudi-U.S. relationship generally, MBN emphasized the strength of our shared mutual interests and the importance of increasing mutual understanding between our nations. He stated that the 9/11 attacks were aimed both at the United States and at Saudi Arabia since, by using Saudi hijackers, Al Qaida sought to sow discord between the two nations. Deterrence -------------- ¶4. (S/NF) Turning to public deterrence, Wolin underscored the importance of continuing to publicize the details of terrorist prosecutions to maximize their deterrent effect. MBN stressed the importance of striking the right balance so as not to create heroes. He stated that it is sometimes effective to highlight behavior that will be seen by the population as criminal or corrupt. As an example, he cited the recent case of an individual who was selling false coupons for the Hajj and using the funds to support extremist activities. ¶5. (S/NF) MBN raised the legal case against Aqil Al Aqil, the former director of Al Haramain in Saudi Arabia, who was detained in 2009 by the MOI and is being held on a number of criminal charges, including extortion. MBN stated Aqil's confessions surprised them, and the progress made in the criminal case against Aqil has given the MOI strength to "go after others like him." MOI was able to uncover money he put in the name of his sons and others. Aqil has been anxious to avoid terrorist financing charges, according to MBN. ¶6. (S/NF) MBN gave other examples of individuals who would be investigated on terrorist financing charges, including a Pakistani driver was stopped last week with SAR 900,000 behind the driver's seat. MBN said people are waiting to hear the name of the person who is detained, which will be leaked. MBN noted all stopped for such a violation would be investigated for terrorist financing. On a related note, Wolin stated that during his trip to Afghanistan, officials there expressed concern over bulk Saudi Riyals coming over the Afghan border. MBN replied it was important to uncover from where the money was originating. Yemen and Iraq -------------- ¶7. (S/NF) MBN raised Yemen with Wolin, stating that in Yemen "they work in cash and check." He said money comes to Yemen from all over the world. MBN raised concern over Al Qaida leadership figures in Yemen and the ability of individuals to move from Yemen to Mecca, and vice versa for training. MBN was concerned about this issue vis-a-vis the large number of American Muslims who travel to Saudi Arabia for the Hajj and Umrah, noting that people traveling to Saudi Arabia for Hajj or Umrah may slip across the porous border into Yemen. The MOI would do what it could to prevent this, to protect both Saudi and U.S. interests. ¶8. (S/NF) MBN also discussed Saudi plans for sealing its northern border with Iraq, which is 40% complete. He believed it important to convince the U.S. that the border should be sealed, describing the project as an "up-front investment that would pay over time." (Note: The SAG is also in the initial stages of building a border fence along Saudi Arabia's southern border with with Yemen. The essence of both border projects is to stop illicit trafficking of humans, narcotics, and funding. End note.) FATF/MENAFATF Mutual Evaluation -------------- ¶9. (S/NF) Both Finance Minister Assaf and SAMA Governor Jasser raised concerns with the FATF/MENAFATF draft mutual evaluation. Assaf said he shared his disappointment with the draft report with Secretary Geithner during his July visit. Given the policies and rules Saudi Arabia has put in place, Assaf was surprised by its negative tone. He was hopeful the U.S. could be helpful with this issue. During a private conversation between Wolin and Jasser in Jeddah, Jasser raised the same concerns. Jasser noted the report made negative comments about Shariah law. Jasser shared Saudi suspicions that the draft report was "ghost written," since, in their view, the evaluation team did not ask in-depth questions during its visit in February 2009. He said the SAG team had answered the questions asked of them, but the rationale for non-compliance was not adequately explained to them. (Note: In February 2009, a joint FATF/MENAFATF evaluation team conducted an onsite evaluation of Saudi Arabia's institutions responsible for anti-money laundering and combating the financing of terrorism (AML/CFT). The draft mutual evaluation has not yet been released. End note.) ¶10. (S/NF) Wolin stated that the FATF is an independent international body and that USG views, either positive or negative, are not a component of the report. Wolin assured both Assaf and Jasser that where the U.S. Treasury Department has concerns about Saudi Arabia's AML/CFT regime, we deal with the SAG directly and with openness. Wolin pledged to review the FATF matter with other Treasury officials with the goal of facilitating constructive discussions between FATF and the SAG. Iran -------------- ¶11. (S/NF) With both Assaf and MBN, Wolin reviewed USG policy with respect to Iran and its nuclear program. Wolin noted the failed attempts to reach a resolution through diplomatic efforts, and the need, therefore, to increase pressure on the Iranian regime. He described the increasing role of the Iranian Revolutionary Guard Corps (IRGC) in the Iranian economy and pointed to recent Treasury designations targeting the IRGC's illicit activity. He sought the SAG's partnership in combating this financial activity and asked the SAG to play a leadership role within the GCC to encourage additional measures with its Gulf neighbors. ¶12. (S/NF) Assaf said he would be pleased to talk with neighbors in the Gulf, but said every country in the Gulf looks at the issue of Iran differently. Assaf said the SAG has spoken with its banks regarding concerns over Iran, and noted that most financial transactions with Iran were in Dubai. MBN stated that he shared our concerns regarding Iran, but that the UAE could do more than Saudi Arabia to increase pressure on Iran. He stated that he wanted "our friends in the UAE to be more aggressive." ¶13. (S/NF) Regarding information-sharing on financial activity, Assaf noted that only a few Saudi banks do business with Iran, and those that do have very limited activity for Iranians traveling to Saudi Arabia for the Hajj and Umrah, an area where the SAG needed to be careful. He further requested that any information of concern on banking activity in Saudi Arabia should be provided through intelligence channels so it could then be investigated and then deliberated by the Permanent Committee on Combating Terrorism (PCTC). (Note: The PCTC is an interagency body in Saudi Arabia that evaluates counterterrorism issues, including terrorist financing issues such as UN listings. End note.) ¶14. (U) This cable was cleared by D/S Wolin. SMITH